12 ms·

Is employer-based health insurance a barrier to entrepreneurship?

85 points by akgerber 16y ago

bengebre 16y ago
A lot of us New Yorkers use the Freelancers Union for health insurance. It solved this exact problem for me. They're more of a service platform for independent workers than a union. They've got health, dental and 401k plans. http://www.freelancersunion.org/ http://www.freelancersunion.org/
- klbarry 16y ago
  I've seen their advertisements, they look awesome. If I wasn't already covered by my parents plan I would go for it.
deleted 16y ago
[deleted]
klochner 16y ago
yes
sammcd 16y ago
I remember an episode where this american life explained why health insurance came to be like it is. I was specifically interested in the fact that they said during WWII wages where not allowed to increase, so the only things that employers could increase were benefits. This was the biggest factor in making Health Insurance employer-based.
- jonknee 16y ago
  Also having it be a tax write-off. If an employee were to buy it on their own it would be with after tax dollars and thus much more costly. (That's even discounting group rate discounts.)
  - bradly 16y ago
    Health insurance premiums are tax deductible.
    - jonknee 16y ago
      Not if you have an employer. The deduction is for self employed people.
      - bradly 16y ago
        Right, sorry. I was speaking in the context of being an entrepreneur. If you are not self-employed, health care costs must clear 7.5% of your AIG before they are deductible.
      - dotBen 16y ago
        which begs the question, if your company is so small that you can't offer health insurance, 401(k), etc then what is the point of having your employees salaried. You might as well have them as contractors so they can enjoy the maximum tax write offs (health insurance, %age of their home as office, all hardware and software, %age of electricity, internet, etc).
        dangrossman 16y ago
        It's not like you can just pick what to call them. An employee is an employee and a contractor is a contractor. If you want someone to work in your office 9-5 and commit their code changes to your server each day, they're an employee, and you can't call them a contractor.
        danssig 16y ago
        I think you can actually. EDIT: What's with the downvotes? Companies do call them a contractor. It happens every day. They're are special concerns but they can certainly work 9-5, etc.
- marknutter 16y ago
  Ah, the law of unintended consequences.
travisglines 16y ago
We've been working on a startup and this has been a constant worry for us. I imagine that a lot of startups are one car crash away or one sickness away from failing.
- MJR 16y ago
  The second part of that statement is that a lot of individuals are one car crash or one sickness away from suffering a serious financial hardship on top of a serious medical issue. If the startup suffers, it's collateral damage.
enjo 16y ago
During our initial phases we lost a potential hire that we really wanted because we just couldn't afford to offer health insurance. They ended up taking a job with a similar startup in Toronto. We had our first hire leave primarily because we couldn't offer health insurance. I'm happy that we're in a place that we can offer those benefits now. Getting through those first couple of years was really tough. If my wife didn't have decent insurance I'm not sure my company would exist today.
- netcan 16y ago
  I'm not in the US, this is a actual question. Is this different in some fundamental way from not being able to offer a high enough salary?
  - jonknee 16y ago
    Health insurance for companies is sold on a group basis and it's often much more difficult (and expensive) to negotiate a smaller group. If you do get a policy, good luck if anyone in your small group has a serious claim...
    - rombus 16y ago
      When my company was sold, it was done as an asset sale, rather than a stock sale, specifically so my business partner could keep the health insurance. He then paid for my policy in the post-sale "group" because it was cheaper for him to pay for him, his wife, me, and my wife, than it was for him to buy an individual policy for him and his wife. (His wife had serious medical claims, and is essentially uninsurable without a bit of a group.)
    - kls 16y ago
      Right, US heath insurance is a form of collective bargaining. The more people you have the more you can negotiate. If you have a small group you cost are exponentially higher and the conditions covered significantly less. I once bought a policy for myself, we had just exited one of our startups and I was on my own and working freelance. So I had no insurance. I was a 25 year old male and the only health problem I had was high blood pressure. It is/was controlled by medication. Anyway, given that I was essentially a group of 1, the policies available to me where pretty expensive. If I recall correctly they where around $1000 a month for me. I did not have family at the time so it was just me. Further I had a $500 annual deductible (I had to spend $500 before they started paying anything) then the per visit co-pays where pretty steep too. They ruled almost every possible male related problem a preexisting condition, so if I had a major medical issue related to any of them, they would not cover it and probably the wost of all, self purchased insurance plans don't cover perscriptions, these are a huge medical expense. So not only where the policies expensive but they where essential useless for 2 years while you run down the clock on the preexisting conditions clauses. Given that many people are insured through a company policy or medicare many never deal directly with the reality of trying to get a decent policy on their own. I have to say, when I had that experience I realized how broke the insurance system is, it is totally stacked in the favor of the insurance company and the only way to claw some of that favor back is through collective bargaining.
PixelJ 16y ago
Answer: Hell yes. Self-insurance is absurdly expensive while group insurance outside of an employer or credit union is harder to find than a Republican with a conscience. The lie that "Obama-Care kills small businesses and/or jobs" is a smokescreen for the truth: Healthcare reform would free employees from indentured health care servitude and allow small businesses to hire more competitively, creating more jobs.
- orangecat 16y ago
  You're right that employer-based health insurance is idiotic and economically destructive (conservative and libertarian analysts have been saying so for decades), but your blatant partisanship is not helpful. In 2008 John McCain's platform included a migration away from employer coverage by treating benefits as taxable income, while simultaneously granting a refundable tax credit for the purchase of individual insurance. Obama and the Democrats instantly demagogued that as "taking away your existing coverage" and defended the employer-based system.
  - rombus 16y ago
    Your blatant partisanship isn't helpful either. Pretty much every analyst has opposed employer-based health insurance, even though you dishonestly implied that conservative and libertarians were alone in that view. Secondly, the tax credit was for $5k, which is a joke for anybody who knows what individual policies cost if you aren't in your 20s, or have any troubling medical history. Thanks for your hypocrisy. Please drive through.
  - Locke1689 16y ago
    Let's please not have political discussions on HN.
    - anamax 16y ago
      > Let's please not have political discussions on HN. It's interesting that you chose to respond to the person who demonstrated "dems good, republicans bad" was wrong instead of the person who just asserted "dems good, republicans bad".
groaner 16y ago
This grumbling keeps coming up here, so I just have to ask: how feasible is it for a young American like me to just pick up and leave for a place that does have a sane health care system, and work on whatever I want? As far as I can tell, these places tend to have fairly steep immigration/visa hurdles to overcome, usually involving some kind of employer sponsorship (presumably to deter freeloaders?). If anyone here has done this, I'd love to hear your stories.
- sethg 16y ago
  As champion says below, everyone in Massachusetts can get health insurance, regardless of pre-existing conditions. You can go to https://www.mahealthconnector.org/portal/site/connector/ https://www.mahealthconnector.org/portal/site/connector/ and see what plans are available, and how much they cost, for someone your age. Or you can hang on until 2014, and something similar will be available throughout the US. If you want to see if you qualify for immigration to Canada as a skilled worker, http://www.cic.gc.ca/english/immigrate/skilled/assess/index.asp http://www.cic.gc.ca/english/immigrate/skilled/assess/index.... has an online test. (I just took the test for the hell of it, and I qualified, even though I don’t have a Canadian job offer in hand and je parle français comme une vache espagnole.)
- bartonfink 16y ago
  I haven't done so, but have done a fair bit of investigation. The most technically correct answer I can give is that it depends on where you're going and how you leave things in the US. First, where you're going. You obviously want to go somewhere with better healthcare than the U.S., which isn't all that difficult to find. The ? becomes what your obligations will be as a somewhat permanent resident and how you can maintain that status legally. That's really going to be location dependent, but you should look and look hard before you leap, because the consequences could be unpleasant if you screw up. I believe there are agencies that cater to potential expats like yourself, and if you're really serious about this you should talk to one of them to make sure you don't step on any landmines in the process. As for the second ?, The US assumes that you continue to owe US taxes as long as you maintain your citizenship, and they make it difficult to give that up. I don't know exact figures, but you are exempt up to something like $78000 of income and are allowed to write any foreign taxes you pay on that off, but as long as you are a US citizen you're on the hook. If you move to Singapore and strike it rich, unless you pay the IRS you could have extradition hearings in your future. I'm pretty sure the deficient US health care system would be pretty low on your list of worries in that case. Again, this is the sort of thing a professional could tell you more about, but this is definitely out there. I don't want to advocate giving up your citizenship lightly, but know that the US is unique in this sort of taxation and making a fortune abroad without paying US taxes would almost certainly be viewed as some sort of tax evasion if you didn't proceed very carefully.
tdmackey 16y ago
Dont have immediate access to the paper. I agree it is a hurdle to overcome, but I don't really know how many startups ultimately don't get started or fail because of it especially if you look at the number of startups and entrepreneurs consistently popping up in the US compared to some countries where the government provides universal healthcare.
- keeptrying 16y ago
  How is this problem overcome ? Ihave a few ideas but no real specifics. A website with specifics would be very useful.
hugh4life 16y ago
Yes, but government ran healthcare is not the answer...
- jonknee 16y ago
  What is the answer and is there anywhere in the world that it's currently functioning?
  - hugh4life 16y ago
    I'm kind of fond of Singapore's health care system... http://econlog.econlib.org/archives/2008/01/singapores_heal.html http://econlog.econlib.org/archives/2008/01/singapores_heal.... http://blog.jparsons.net/2009/08/why-singapores-health-care-system-beats.html http://blog.jparsons.net/2009/08/why-singapores-health-care-...
    - jonknee 16y ago
      Me too, but it's government run... Seems like your previous statement would preclude you from liking it.
      - lawnchair_larry 16y ago
        Some governments are good at running some things. The US government seems to screw up everything. I don't know why this is, but if public health care ever becomes reality, and it is anything like the DMV, or any government services in California for that matter, or VA hospitals...may [deity] help us all. I am in no way a fan of the perverse incentives created by a for-profit private health care system, but I am worried that the alternative might be even worse.
        Experimentalist 16y ago
        What wrong with a for-profit system? There should be MORE profit, not less. High profits attract entrepreneurs to compete for customers by offering lower prices and innovating - consumers benefit. The current system is the exact opposite - there is relatively little and uncertain profit (and high barriers to entry) in insurance and hospitals, and a ton of government interference and regulation. Few entrepreneurs want to get involved, which reduces competition and innovation and keeps prices higher. "Plunging revenues from investments have forced median profit margins for U.S. hospitals to zero, according to a Thomson Reuters analysis of hospital finances published on Monday. And half of the more than 400 hospitals studied are losing money, the analysis found." http://www.reuters.com/article/2009/03/02/us-hospitals-usa-idUSTRE5216G320090302 http://www.reuters.com/article/2009/03/02/us-hospitals-usa-i...
keeptrying 16y ago
What are the solutions employed by all the startups that get started?
vs2 16y ago
run your startup in England, free health care for everyone
Loic 16y ago
For information, here in Germany, from where I run my startup which itself is a UK Limited, I provide my employees with full health insurance (teeth, sick days, everything), pension, unemployment insurance, etc. for basically €700/month for an after tax salary of about €2500/month. As soon as you start to factor in all the costs of insurance, etc., doing business in the old Europe is pretty cheap. Even in Denmark, where I lived and worked for a while, you get everything included from the state and as a startup founder, this is really great. I believe in free market for a lot of things, but not for health insurance.
- dfox 16y ago
  what I don't like on european (interpolating from czech, but it's probably quite similar everywhere in europe) health and welfare insurance is that you generally can't opt-out from that. Complete opt-out is probably bad idea, but I would like to pay insurance only when I actually have income, not be obliged by law to pay what equates to half of my other expenses every month. It seems fair to me to roll these "insurances" into income tax, as it is essentially nothing different from income tax (although logic of caps is different on income tax and this "insurances"). I'm perfectly willing to pay significantly more than is obligatory, but only when my income for given period allows that.
  - Loic 16y ago
    In Germany, Denmark and France (the only places I was employed for more than 3 years), if you have no incomes, you are automatically covered. Of course as a consultant, if you have no incomes in a given month, you still need to pay. If you do not want, you need to switch to officially unemployed for the month, which is not worth it.
- dnautics 16y ago
  Why don't you believe in a free market for health insurance? Forcing people to pay into a health insurance is kind of scammy - let's say that I have a genetic condition that is certain to kill me rapidly at age 30. I want to live my life to the fullest, and I'd rather not be forced to buy health insurance that protects me from things like adult onset diabetes, alzheimer's, cancer, parkinson's, etc, that I'm just not going to get. Why should I be forced to pony up for other people's healthcare, too? What do I owe those bastards who get to live twice as long as I am and beat me up and teased me on the playground in middle school? The more insidious thing about universal healthcare is that it really screws over most minorities. Minorities tend to have diseases that are not as well researched as those found in ethnic majorities (or certain minorities which are disproportionately represented in the medical research community). Moreover, drug testing -for safety and efficacy- in minorities is very scant, and it is sometimes the case that adverse reactions to drugs occur in minorities that do not occur in the ethnic or racial majorities. Of course to find that out you need statistically relevant sample sizes, and the way drug safety testing is done is by recruiting on college campuses - you can see the potential problem here - and even still some minorities that are overrepresented on colleges are, for whatever reason, underrepresented in testing pools. So as a minority, one might be paying into a system that disproportionately treats diseases that one would not be getting, or with different pathologies, and for which the treatments may be completely ineffective or even dangerous due to lack of study. Then there is this problem. What if those who decide health coverage decide that heterozygous genetic condition X is covered (and it's expensive). Two parents who are carriers now can decide, hey we can afford to have kids - after all it's their right. So now everyone is saddled with the burden of their selfish choice. Or, we can restrict their liberty by prohibiting all such pairs of parents from reproducing. Whereas if they are responsible for the cost of their children's care, then the simple answer is they might think twice about having children and if they are foolhardy enough to, there is a 1 in 4 chance they get dinged with the cost of coverage. Ultimately, any governmental (i.e. non-free-market) health insurance plan must either explicitly discriminate between individuals or, if universal, implicitly discriminate between individuals. The perverted consequence is, ultimately, going to be a transfer of wealth from the poor (via inflation) to those who have the right genetic predisposition to conditions which are decided to be covered by the powers that be. Keep in mind that 'free market' != 'for-profit'. You can have nonprofit insurance companies, and healthcare charities, in a 'free market' system. What free market means is that the consumer has a choice of where to go for their services. If you are saying that you don't like 'free market healthcare' you are saying that in the aggregate, the population is too stupid to make responsible, cost-effective decisions about their own health. If that is the case, who or what group of people could possibly be so enlightened and all-knowing to correctly orchestrate all those choices from the full society on down to the individual level? And how might we shield society from the hubris of our godlike health chancellor/council?
notlion 16y ago
yes...
abalashov 16y ago
It hasn't been for me, but only because I (and other, likeminded people) have chosen to bank on the fact that we're relatively healthy so far--knock on wood--and chosen to forego it. I don't mean that I'm literally uninsured. I mean that I have one of those "catastrophic" high-deductible policies that so many young people are stuck with, so for any kind of routine procedures or office visits or anything barring an improbable tragedy, it's as good as not having a policy at all. The charges are simply passed through to me unadjusted. And when you have a policy like that and run into a large claim (say, a $90,000 hospitalisation with an acute condition), you have a fairly high chance of being denied a claim on the basis of a "pre-existing condition" or some other reason they will find to try to deny your claim. Insurers have entire departments just to deal with disputing large claims. Much of the Obamacare "pre-existing condition" legislation doesn't apply to this scenario, or grandfathers in policies written in prior years. An actually decent policy - some kind of low-deductible, high-choice PPO plan - is just absurdly expensive from an operational expense drag point of view, even for an ostensibly healthy 25 year old.
- danssig 16y ago
  If you have catastrophic you may as well be uninsured. Can you take a $10k hit? I'm guessing you can't.
  - abalashov 16y ago
    Absolutely not.
    - danssig 16y ago
      Then what are you paying for? :)
athst 16y ago
I certainly think so - I'm in the process of quitting my job to work on a company, and the health insurance will be my biggest expense other than rent and food. If it was more affordable, I could survive a lot longer without running out of money. Also, if you're starting a company, you shouldn't even consider not having health insurance - while expensive, at least there is a limit to the downside. Without it, your potential downside is almost unlimited.
DuckPaddle 16y ago
Insurance in general is an impediment to entrepreneurship. I know our insurance costs are way more per unit than those of larger companies. I don't know if the higher costs could be attributed to the marketplace or the fact the larger companies are much more sophisticated in their risk management.
cletus 16y ago
To give some perspective I now live in the US and have, as best as I can tell, excellent insurance from my employer. I am Australian and have lived in the UK, Switzerland and Germany so I can compare all of these. Australia has a mix of private and public health care. You pay 1.5% of your income as theMedicare levy. If you have sufficient income but no private hospital insurance, you pay a surcharge (1% iirc). The previous (Liberal/National, which is actually conservative) government made private health insurance tax deductible. I can't remember but the current government has tried to roll that back but I think has so far failed (to get it through the Senate). Private health insurance pays you a portion back of each expense, a system I actually think is not good. It encourages people to "get their money's worth". Doctor surgeries are all small businesses so they have differing hours, costs, etc. Medicare pays for a part of that bill. Low income earners can generally get their doctor visits bulk-billed, meaning the practice only charges the government rebate so there is no out of pocket expense. For years I had no private health insurance. Any serious hospital care (eg cancer treatment, transplant, serious injury, heart attack, stroke, etc) could be covered in the public system. The private system seems like it's for people who don't want to share hospital rooms. Some so-called elective surgery can have long waiting times which is why I say I'm self-insured. If I needed something like this I could pay $2-5000 out of pocket (large medical expenses are tax deductible too). Not everyone has the disposable income for that. The one weird thing is private health insurers have "community pricing" (I forget the exact term). That means they charge the same premium for everybody. The net result is young people don't get it and old people drive up the premiums. The UK system is similar except they take 11% of your income (capped) but health care is basically one huge bureaucracy. Seeing a GP is generally a pain. You have to be registered with a surgery. Often their books are full so you can only get into the one open from 9-4 Mon-Fri. Since that's typically near where you live going to the doctor typically means taking the day off work. The UK has long wait times for some even common medical procedures (eg certain scans) to the point they've started paying Germany and other countries to help clear the backlog. Seeing a doctor is free though but IMHO this leads to overuse. The cliched example is of the old age pensioner seeing the doctor to have someone to talk to. Also for a procedure or seeing a specialist you'll receive a letter telling you when your appointment is sometimes 3+ months later and it might be a few days away. Can't make it? Back to the bottom of the list. Switzerland has a system of mandatory insurances everyone must by law have various health and unemployment insurances. I don't remember the specifics but I had lime 5 policies iirc. Actually Germany I know little about because I never used the system while there. It has a reputation for efficiency though. The US system is IMHO the worst in the developed world (and even some developing countries put it to shame).as people have said the best insurance is negotiated at group level. Good for large companies. Bad for the self-employed, small businesses, entrepreneurs and individuals. What's more, if you start to incur large expenses the companies are motivated to find some way to disqualify you. And then good luck as you'll have a preexisting condition. Last month a story made the national press of a veteran in cancer treatment being dropped for being 2 cents short on paying the premium. Defendants of the current system argue free market but the result is the most expensive health care I've ever seen. Drugs, hospitals, doctors, you name it. The litigious nature of the US probably doesn't help. Actually even Australia has the problem of litigation in certain fields. Obstetricians pay upwards of $200k a year in malpractice insurance due to a lot of frivolous litigation, forcing many out of the profession. It's a field dominated by women who more often than not end up having families at which point it is uneconomic to work part time in that field due to the insurance. So if I ever went to work for a small start up here I'd take advantage of COBRA (iirc) for 1+ year then get insurance with a huge excess and I ever needed, say, cancer treatment I'd go back to the UK or Australia (I have dual citizenship). Not everyone has that option. I get the feeling many entrepreneurs are young and gambling with their health, figuring it's cheaper to declare bankruptcy pr just not figuring on unintended expenses like a motor vehicle accident. So anyway I'm not against health insurance but group insurance is a huge problem and people need the right to get insurance. Honorifics are better insurers than for-profits (IMHO).
champion 16y ago
Come to Massachusetts! Our health care reform means that the market for private insurance isn't insane. You can afford reasonable coverage for reasonable price through the MassConnector group plans, and they can't deny you because of pre-existing health conditions (they only ask age / number of dependents). While far from perfect, it is a significant improvement for entrepreneurs who may be buying insurance for themselves and for early employees before funding/revenue to pay for traditional coverage. There are a lot of folks who cannot go without insurance but in many areas the cost of buying outside of an employer is prohibitively expensive or restrictive.
itsnotvalid 16y ago
Next time try posting links that doesn't need subscription - not all of us here are backed by institutions to read hacker news :-) http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pdf http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pd... (viewer: http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%2Fpubs%2Fworking_papers%2F2010%2FRAND_WR637-1.pdf http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%...) (scribd: http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp6ug6ewa282e http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp...) Not as well formated as ScienceDirect (which is sourced from the Journal of Health Economics) but doesn't require a subscription.

85 points by akgerber 16y ago

A lot of us New Yorkers use the Freelancers Union for health insurance. It solved this exact problem for me. They're more of a service platform for independent workers than a union. They've got health, dental and 401k plans. http://www.freelancersunion.org/ http://www.freelancersunion.org/

klbarry 16y ago
I've seen their advertisements, they look awesome. If I wasn't already covered by my parents plan I would go for it.

deleted 16y ago

[deleted]

klochner 16y ago

yes

sammcd 16y ago

I remember an episode where this american life explained why health insurance came to be like it is. I was specifically interested in the fact that they said during WWII wages where not allowed to increase, so the only things that employers could increase were benefits. This was the biggest factor in making Health Insurance employer-based.

jonknee 16y ago
Also having it be a tax write-off. If an employee were to buy it on their own it would be with after tax dollars and thus much more costly. (That's even discounting group rate discounts.)
- bradly 16y ago
  Health insurance premiums are tax deductible.
  - jonknee 16y ago
    Not if you have an employer. The deduction is for self employed people.
    - bradly 16y ago
      Right, sorry. I was speaking in the context of being an entrepreneur. If you are not self-employed, health care costs must clear 7.5% of your AIG before they are deductible.
    - dotBen 16y ago
      which begs the question, if your company is so small that you can't offer health insurance, 401(k), etc then what is the point of having your employees salaried. You might as well have them as contractors so they can enjoy the maximum tax write offs (health insurance, %age of their home as office, all hardware and software, %age of electricity, internet, etc).
      - dangrossman 16y ago
        It's not like you can just pick what to call them. An employee is an employee and a contractor is a contractor. If you want someone to work in your office 9-5 and commit their code changes to your server each day, they're an employee, and you can't call them a contractor.
        danssig 16y ago
        I think you can actually. EDIT: What's with the downvotes? Companies do call them a contractor. It happens every day. They're are special concerns but they can certainly work 9-5, etc.
marknutter 16y ago
Ah, the law of unintended consequences.

travisglines 16y ago

We've been working on a startup and this has been a constant worry for us. I imagine that a lot of startups are one car crash away or one sickness away from failing.

MJR 16y ago
The second part of that statement is that a lot of individuals are one car crash or one sickness away from suffering a serious financial hardship on top of a serious medical issue. If the startup suffers, it's collateral damage.

enjo 16y ago

During our initial phases we lost a potential hire that we really wanted because we just couldn't afford to offer health insurance. They ended up taking a job with a similar startup in Toronto. We had our first hire leave primarily because we couldn't offer health insurance. I'm happy that we're in a place that we can offer those benefits now. Getting through those first couple of years was really tough. If my wife didn't have decent insurance I'm not sure my company would exist today.

netcan 16y ago
I'm not in the US, this is a actual question. Is this different in some fundamental way from not being able to offer a high enough salary?
- jonknee 16y ago
  Health insurance for companies is sold on a group basis and it's often much more difficult (and expensive) to negotiate a smaller group. If you do get a policy, good luck if anyone in your small group has a serious claim...
  - rombus 16y ago
    When my company was sold, it was done as an asset sale, rather than a stock sale, specifically so my business partner could keep the health insurance. He then paid for my policy in the post-sale "group" because it was cheaper for him to pay for him, his wife, me, and my wife, than it was for him to buy an individual policy for him and his wife. (His wife had serious medical claims, and is essentially uninsurable without a bit of a group.)
  - kls 16y ago
    Right, US heath insurance is a form of collective bargaining. The more people you have the more you can negotiate. If you have a small group you cost are exponentially higher and the conditions covered significantly less. I once bought a policy for myself, we had just exited one of our startups and I was on my own and working freelance. So I had no insurance. I was a 25 year old male and the only health problem I had was high blood pressure. It is/was controlled by medication. Anyway, given that I was essentially a group of 1, the policies available to me where pretty expensive. If I recall correctly they where around $1000 a month for me. I did not have family at the time so it was just me. Further I had a $500 annual deductible (I had to spend $500 before they started paying anything) then the per visit co-pays where pretty steep too. They ruled almost every possible male related problem a preexisting condition, so if I had a major medical issue related to any of them, they would not cover it and probably the wost of all, self purchased insurance plans don't cover perscriptions, these are a huge medical expense. So not only where the policies expensive but they where essential useless for 2 years while you run down the clock on the preexisting conditions clauses. Given that many people are insured through a company policy or medicare many never deal directly with the reality of trying to get a decent policy on their own. I have to say, when I had that experience I realized how broke the insurance system is, it is totally stacked in the favor of the insurance company and the only way to claw some of that favor back is through collective bargaining.

PixelJ 16y ago

Answer: Hell yes. Self-insurance is absurdly expensive while group insurance outside of an employer or credit union is harder to find than a Republican with a conscience. The lie that "Obama-Care kills small businesses and/or jobs" is a smokescreen for the truth: Healthcare reform would free employees from indentured health care servitude and allow small businesses to hire more competitively, creating more jobs.

orangecat 16y ago
You're right that employer-based health insurance is idiotic and economically destructive (conservative and libertarian analysts have been saying so for decades), but your blatant partisanship is not helpful. In 2008 John McCain's platform included a migration away from employer coverage by treating benefits as taxable income, while simultaneously granting a refundable tax credit for the purchase of individual insurance. Obama and the Democrats instantly demagogued that as "taking away your existing coverage" and defended the employer-based system.
- rombus 16y ago
  Your blatant partisanship isn't helpful either. Pretty much every analyst has opposed employer-based health insurance, even though you dishonestly implied that conservative and libertarians were alone in that view. Secondly, the tax credit was for $5k, which is a joke for anybody who knows what individual policies cost if you aren't in your 20s, or have any troubling medical history. Thanks for your hypocrisy. Please drive through.
- Locke1689 16y ago
  Let's please not have political discussions on HN.
  - anamax 16y ago
    > Let's please not have political discussions on HN. It's interesting that you chose to respond to the person who demonstrated "dems good, republicans bad" was wrong instead of the person who just asserted "dems good, republicans bad".

groaner 16y ago

This grumbling keeps coming up here, so I just have to ask: how feasible is it for a young American like me to just pick up and leave for a place that does have a sane health care system, and work on whatever I want? As far as I can tell, these places tend to have fairly steep immigration/visa hurdles to overcome, usually involving some kind of employer sponsorship (presumably to deter freeloaders?). If anyone here has done this, I'd love to hear your stories.

sethg 16y ago
As champion says below, everyone in Massachusetts can get health insurance, regardless of pre-existing conditions. You can go to https://www.mahealthconnector.org/portal/site/connector/ https://www.mahealthconnector.org/portal/site/connector/ and see what plans are available, and how much they cost, for someone your age. Or you can hang on until 2014, and something similar will be available throughout the US. If you want to see if you qualify for immigration to Canada as a skilled worker, http://www.cic.gc.ca/english/immigrate/skilled/assess/index.asp http://www.cic.gc.ca/english/immigrate/skilled/assess/index.... has an online test. (I just took the test for the hell of it, and I qualified, even though I don’t have a Canadian job offer in hand and je parle français comme une vache espagnole.)
bartonfink 16y ago
I haven't done so, but have done a fair bit of investigation. The most technically correct answer I can give is that it depends on where you're going and how you leave things in the US. First, where you're going. You obviously want to go somewhere with better healthcare than the U.S., which isn't all that difficult to find. The ? becomes what your obligations will be as a somewhat permanent resident and how you can maintain that status legally. That's really going to be location dependent, but you should look and look hard before you leap, because the consequences could be unpleasant if you screw up. I believe there are agencies that cater to potential expats like yourself, and if you're really serious about this you should talk to one of them to make sure you don't step on any landmines in the process. As for the second ?, The US assumes that you continue to owe US taxes as long as you maintain your citizenship, and they make it difficult to give that up. I don't know exact figures, but you are exempt up to something like $78000 of income and are allowed to write any foreign taxes you pay on that off, but as long as you are a US citizen you're on the hook. If you move to Singapore and strike it rich, unless you pay the IRS you could have extradition hearings in your future. I'm pretty sure the deficient US health care system would be pretty low on your list of worries in that case. Again, this is the sort of thing a professional could tell you more about, but this is definitely out there. I don't want to advocate giving up your citizenship lightly, but know that the US is unique in this sort of taxation and making a fortune abroad without paying US taxes would almost certainly be viewed as some sort of tax evasion if you didn't proceed very carefully.

tdmackey 16y ago

Dont have immediate access to the paper. I agree it is a hurdle to overcome, but I don't really know how many startups ultimately don't get started or fail because of it especially if you look at the number of startups and entrepreneurs consistently popping up in the US compared to some countries where the government provides universal healthcare.

keeptrying 16y ago
How is this problem overcome ? Ihave a few ideas but no real specifics. A website with specifics would be very useful.

hugh4life 16y ago

Yes, but government ran healthcare is not the answer...

jonknee 16y ago
What is the answer and is there anywhere in the world that it's currently functioning?
- hugh4life 16y ago
  I'm kind of fond of Singapore's health care system... http://econlog.econlib.org/archives/2008/01/singapores_heal.html http://econlog.econlib.org/archives/2008/01/singapores_heal.... http://blog.jparsons.net/2009/08/why-singapores-health-care-system-beats.html http://blog.jparsons.net/2009/08/why-singapores-health-care-...
  - jonknee 16y ago
    Me too, but it's government run... Seems like your previous statement would preclude you from liking it.
    - lawnchair_larry 16y ago
      Some governments are good at running some things. The US government seems to screw up everything. I don't know why this is, but if public health care ever becomes reality, and it is anything like the DMV, or any government services in California for that matter, or VA hospitals...may [deity] help us all. I am in no way a fan of the perverse incentives created by a for-profit private health care system, but I am worried that the alternative might be even worse.
      - Experimentalist 16y ago
        What wrong with a for-profit system? There should be MORE profit, not less. High profits attract entrepreneurs to compete for customers by offering lower prices and innovating - consumers benefit. The current system is the exact opposite - there is relatively little and uncertain profit (and high barriers to entry) in insurance and hospitals, and a ton of government interference and regulation. Few entrepreneurs want to get involved, which reduces competition and innovation and keeps prices higher. "Plunging revenues from investments have forced median profit margins for U.S. hospitals to zero, according to a Thomson Reuters analysis of hospital finances published on Monday. And half of the more than 400 hospitals studied are losing money, the analysis found." http://www.reuters.com/article/2009/03/02/us-hospitals-usa-idUSTRE5216G320090302 http://www.reuters.com/article/2009/03/02/us-hospitals-usa-i...

keeptrying 16y ago

What are the solutions employed by all the startups that get started?

vs2 16y ago

run your startup in England, free health care for everyone

Loic 16y ago

For information, here in Germany, from where I run my startup which itself is a UK Limited, I provide my employees with full health insurance (teeth, sick days, everything), pension, unemployment insurance, etc. for basically €700/month for an after tax salary of about €2500/month. As soon as you start to factor in all the costs of insurance, etc., doing business in the old Europe is pretty cheap. Even in Denmark, where I lived and worked for a while, you get everything included from the state and as a startup founder, this is really great. I believe in free market for a lot of things, but not for health insurance.

dfox 16y ago
what I don't like on european (interpolating from czech, but it's probably quite similar everywhere in europe) health and welfare insurance is that you generally can't opt-out from that. Complete opt-out is probably bad idea, but I would like to pay insurance only when I actually have income, not be obliged by law to pay what equates to half of my other expenses every month. It seems fair to me to roll these "insurances" into income tax, as it is essentially nothing different from income tax (although logic of caps is different on income tax and this "insurances"). I'm perfectly willing to pay significantly more than is obligatory, but only when my income for given period allows that.
- Loic 16y ago
  In Germany, Denmark and France (the only places I was employed for more than 3 years), if you have no incomes, you are automatically covered. Of course as a consultant, if you have no incomes in a given month, you still need to pay. If you do not want, you need to switch to officially unemployed for the month, which is not worth it.
dnautics 16y ago
Why don't you believe in a free market for health insurance? Forcing people to pay into a health insurance is kind of scammy - let's say that I have a genetic condition that is certain to kill me rapidly at age 30. I want to live my life to the fullest, and I'd rather not be forced to buy health insurance that protects me from things like adult onset diabetes, alzheimer's, cancer, parkinson's, etc, that I'm just not going to get. Why should I be forced to pony up for other people's healthcare, too? What do I owe those bastards who get to live twice as long as I am and beat me up and teased me on the playground in middle school? The more insidious thing about universal healthcare is that it really screws over most minorities. Minorities tend to have diseases that are not as well researched as those found in ethnic majorities (or certain minorities which are disproportionately represented in the medical research community). Moreover, drug testing -for safety and efficacy- in minorities is very scant, and it is sometimes the case that adverse reactions to drugs occur in minorities that do not occur in the ethnic or racial majorities. Of course to find that out you need statistically relevant sample sizes, and the way drug safety testing is done is by recruiting on college campuses - you can see the potential problem here - and even still some minorities that are overrepresented on colleges are, for whatever reason, underrepresented in testing pools. So as a minority, one might be paying into a system that disproportionately treats diseases that one would not be getting, or with different pathologies, and for which the treatments may be completely ineffective or even dangerous due to lack of study. Then there is this problem. What if those who decide health coverage decide that heterozygous genetic condition X is covered (and it's expensive). Two parents who are carriers now can decide, hey we can afford to have kids - after all it's their right. So now everyone is saddled with the burden of their selfish choice. Or, we can restrict their liberty by prohibiting all such pairs of parents from reproducing. Whereas if they are responsible for the cost of their children's care, then the simple answer is they might think twice about having children and if they are foolhardy enough to, there is a 1 in 4 chance they get dinged with the cost of coverage. Ultimately, any governmental (i.e. non-free-market) health insurance plan must either explicitly discriminate between individuals or, if universal, implicitly discriminate between individuals. The perverted consequence is, ultimately, going to be a transfer of wealth from the poor (via inflation) to those who have the right genetic predisposition to conditions which are decided to be covered by the powers that be. Keep in mind that 'free market' != 'for-profit'. You can have nonprofit insurance companies, and healthcare charities, in a 'free market' system. What free market means is that the consumer has a choice of where to go for their services. If you are saying that you don't like 'free market healthcare' you are saying that in the aggregate, the population is too stupid to make responsible, cost-effective decisions about their own health. If that is the case, who or what group of people could possibly be so enlightened and all-knowing to correctly orchestrate all those choices from the full society on down to the individual level? And how might we shield society from the hubris of our godlike health chancellor/council?

notlion 16y ago

yes...

abalashov 16y ago

It hasn't been for me, but only because I (and other, likeminded people) have chosen to bank on the fact that we're relatively healthy so far--knock on wood--and chosen to forego it. I don't mean that I'm literally uninsured. I mean that I have one of those "catastrophic" high-deductible policies that so many young people are stuck with, so for any kind of routine procedures or office visits or anything barring an improbable tragedy, it's as good as not having a policy at all. The charges are simply passed through to me unadjusted. And when you have a policy like that and run into a large claim (say, a $90,000 hospitalisation with an acute condition), you have a fairly high chance of being denied a claim on the basis of a "pre-existing condition" or some other reason they will find to try to deny your claim. Insurers have entire departments just to deal with disputing large claims. Much of the Obamacare "pre-existing condition" legislation doesn't apply to this scenario, or grandfathers in policies written in prior years. An actually decent policy - some kind of low-deductible, high-choice PPO plan - is just absurdly expensive from an operational expense drag point of view, even for an ostensibly healthy 25 year old.

danssig 16y ago
If you have catastrophic you may as well be uninsured. Can you take a $10k hit? I'm guessing you can't.
- abalashov 16y ago
  Absolutely not.
  - danssig 16y ago
    Then what are you paying for? :)

athst 16y ago

I certainly think so - I'm in the process of quitting my job to work on a company, and the health insurance will be my biggest expense other than rent and food. If it was more affordable, I could survive a lot longer without running out of money. Also, if you're starting a company, you shouldn't even consider not having health insurance - while expensive, at least there is a limit to the downside. Without it, your potential downside is almost unlimited.

DuckPaddle 16y ago

Insurance in general is an impediment to entrepreneurship. I know our insurance costs are way more per unit than those of larger companies. I don't know if the higher costs could be attributed to the marketplace or the fact the larger companies are much more sophisticated in their risk management.

cletus 16y ago

To give some perspective I now live in the US and have, as best as I can tell, excellent insurance from my employer. I am Australian and have lived in the UK, Switzerland and Germany so I can compare all of these. Australia has a mix of private and public health care. You pay 1.5% of your income as theMedicare levy. If you have sufficient income but no private hospital insurance, you pay a surcharge (1% iirc). The previous (Liberal/National, which is actually conservative) government made private health insurance tax deductible. I can't remember but the current government has tried to roll that back but I think has so far failed (to get it through the Senate). Private health insurance pays you a portion back of each expense, a system I actually think is not good. It encourages people to "get their money's worth". Doctor surgeries are all small businesses so they have differing hours, costs, etc. Medicare pays for a part of that bill. Low income earners can generally get their doctor visits bulk-billed, meaning the practice only charges the government rebate so there is no out of pocket expense. For years I had no private health insurance. Any serious hospital care (eg cancer treatment, transplant, serious injury, heart attack, stroke, etc) could be covered in the public system. The private system seems like it's for people who don't want to share hospital rooms. Some so-called elective surgery can have long waiting times which is why I say I'm self-insured. If I needed something like this I could pay $2-5000 out of pocket (large medical expenses are tax deductible too). Not everyone has the disposable income for that. The one weird thing is private health insurers have "community pricing" (I forget the exact term). That means they charge the same premium for everybody. The net result is young people don't get it and old people drive up the premiums. The UK system is similar except they take 11% of your income (capped) but health care is basically one huge bureaucracy. Seeing a GP is generally a pain. You have to be registered with a surgery. Often their books are full so you can only get into the one open from 9-4 Mon-Fri. Since that's typically near where you live going to the doctor typically means taking the day off work. The UK has long wait times for some even common medical procedures (eg certain scans) to the point they've started paying Germany and other countries to help clear the backlog. Seeing a doctor is free though but IMHO this leads to overuse. The cliched example is of the old age pensioner seeing the doctor to have someone to talk to. Also for a procedure or seeing a specialist you'll receive a letter telling you when your appointment is sometimes 3+ months later and it might be a few days away. Can't make it? Back to the bottom of the list. Switzerland has a system of mandatory insurances everyone must by law have various health and unemployment insurances. I don't remember the specifics but I had lime 5 policies iirc. Actually Germany I know little about because I never used the system while there. It has a reputation for efficiency though. The US system is IMHO the worst in the developed world (and even some developing countries put it to shame).as people have said the best insurance is negotiated at group level. Good for large companies. Bad for the self-employed, small businesses, entrepreneurs and individuals. What's more, if you start to incur large expenses the companies are motivated to find some way to disqualify you. And then good luck as you'll have a preexisting condition. Last month a story made the national press of a veteran in cancer treatment being dropped for being 2 cents short on paying the premium. Defendants of the current system argue free market but the result is the most expensive health care I've ever seen. Drugs, hospitals, doctors, you name it. The litigious nature of the US probably doesn't help. Actually even Australia has the problem of litigation in certain fields. Obstetricians pay upwards of $200k a year in malpractice insurance due to a lot of frivolous litigation, forcing many out of the profession. It's a field dominated by women who more often than not end up having families at which point it is uneconomic to work part time in that field due to the insurance. So if I ever went to work for a small start up here I'd take advantage of COBRA (iirc) for 1+ year then get insurance with a huge excess and I ever needed, say, cancer treatment I'd go back to the UK or Australia (I have dual citizenship). Not everyone has that option. I get the feeling many entrepreneurs are young and gambling with their health, figuring it's cheaper to declare bankruptcy pr just not figuring on unintended expenses like a motor vehicle accident. So anyway I'm not against health insurance but group insurance is a huge problem and people need the right to get insurance. Honorifics are better insurers than for-profits (IMHO).

champion 16y ago

Come to Massachusetts! Our health care reform means that the market for private insurance isn't insane. You can afford reasonable coverage for reasonable price through the MassConnector group plans, and they can't deny you because of pre-existing health conditions (they only ask age / number of dependents). While far from perfect, it is a significant improvement for entrepreneurs who may be buying insurance for themselves and for early employees before funding/revenue to pay for traditional coverage. There are a lot of folks who cannot go without insurance but in many areas the cost of buying outside of an employer is prohibitively expensive or restrictive.

itsnotvalid 16y ago

Next time try posting links that doesn't need subscription - not all of us here are backed by institutions to read hacker news :-) http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pdf http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pd... (viewer: http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%2Fpubs%2Fworking_papers%2F2010%2FRAND_WR637-1.pdf http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%...) (scribd: http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp6ug6ewa282e http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp...) Not as well formated as ScienceDirect (which is sourced from the Journal of Health Economics) but doesn't require a subscription.