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Why being an aussie start-up doesn't suck - two words - health insurance. The public health system provides for much, and as a private citizen for a few hundred

Why being an aussie start-up doesn't suck - two words - health insurance. The public health system provides for much, and as a private citizen for a few hundred dollars a month I can get coverage for elective things. I'm not faced with a decision like 'shit, if I quit my job at bigco and go and do this startup thing and then get sick will I be putting my life at risk?'

Shivetya 15y ago
Yet many young people in no way require the amount of health coverage older people do. Why should they be forced to buy into something they don't need? Each year we go through our health care presentations we have numerous people asking to opt out but they aren't allowed. Yes it weighs on the minds of many, but not all. I am all the more willing to pay as you go on my health care but I would prefer to see reasonable coverage for catastrophic care which is what really becomes expensive.
- run4yourlives 15y ago
  The whole point of health insurance - nay, insurance in general - is the idea that the well fund the sick in part, because being sick costs so much money. If all the young healthy people opted out, you'd have pools full of old sick people, and rates would be so bad, there wound't be much of a point. With insurance, you need a large element of people that are essentially paying into the service for no benefit in order to insure the risk. That's the whole idea.
  - anamax 15y ago
    > The whole point of health insurance - nay, insurance in general - is the idea that the well fund the sick in part, because being sick costs so much money. Actually, no. The idea of insurance is that you pay a slight premium over your expected costs in order to avoid getting hit by variance. (The slight premium is to pay transaction costs.) Healthy people paying for sick people is subsidy, even if you hide the subsidy behind the label "insurance". Being "older", I'm all for today's young people subsidizing older people. I wonder if the next group of young people will feel like subsidizing the current group when the current group gets old, but that's not my problem.
    - run4yourlives 15y ago
      That might be the RNC's talking points of how insurance works, but given that I'm in the industry, I can tell you that insurance exists to offset risk by spreading costs over a pool of people. The concept of "risk" by default means that certain people will never utilize the service. Premium is a factor of the risk analysis, not a transaction fee. This works very well for concepts like auto or home insurance: most people will - in a given year - never actually crash their cars or destroy their homes. The premium they pay is based on the risk profile of one of these things happening to them, and overall to the pool. Health insurance is a little different, but the concepts remain the same. The only real difference between a nationally run program and several private programs - assuming a level of administrative competency - is the size of the pool. The larger the pool, the less the risk, the cheaper the average premium. You can call it dirty words and all, but if you are against the concept of national insurance programs as a principle, you should really evaluate your view of insurance in general, since you're "subsidizing" people who crash their cars, have house fires, pick the wrong banks etc, etc. As an aside: I'm in Canada. As such you might find it interesting that while I believe the US system isn't using the full potential of the available pool, I believe our system has forgotten a lot of the concepts that sustain the insurance industry by just declaring medical care a "right" despite the costs. Both of our countries would be better served by abandoning ideologies here.
      - anamax 15y ago
        > That might be the RNC's talking points of how insurance works, but given that I'm in the industry, I can tell you that insurance exists to offset risk by spreading costs over a pool of people. Both insurance and subsidies (as I described them) spread risks over a pool. The difference is in how we charge folks in the pool. If we charge them by their expected cost, it's insurance. If we charge some people significantly more than their expected cost so we can charge others less, the first group is subsidizing the second. And no, the fact that I don't have a claim doesn't imply that I'm subsidizing anyone any more than the fact that someone hits the lottery implies that lotteries are a good bet. The relevant question is how my cost of "insurance" compares to my expected claims. There is value in reducing variance - I'd rather pay $600/year for 10 years instead of paying $5800 one year and nothing for 9 years. And, I'm willing to take the chance that I'd never pay anything to avoid the hit of paying $5800 twice and nothing 8 times. (In this example, I'm paying $200 so I'm not subject to variance.) However, I'm a lot less willing to pay $600/year if I think that my expected costs are $1k once every 10 years. That's the problem with subsidies disguised as "insurance". The rational response is to try to get out of the pool. > Premium is a factor of the risk analysis, not a transaction fee. I didn't refer to insurance premiums, I referred to the fact that maintaining a pool has costs which the payments must cover in addition to the losses. > The larger the pool, the less the risk, the cheaper the average premium. That's simply not true. My risk of having a car accident does not depend on how many people are in "the pool". There can be economies of scale in the costs of maintaining the pool, but they have nothing to do with risk. > if you are against the concept of national insurance programs as a principle, you should really evaluate your view of insurance in general, since you're "subsidizing" people who crash their cars, have house fires, pick the wrong banks etc, etc. I'm not against insurance. However, subsidies have issues and it is dishonest to claim otherwise and confuse the two.
- briandon 15y ago
  It's like opting out of vaccinations for fatal/life-threatening diseases. As long as you don't contract that disease, you'll be fine and patting yourself on the back regarding your prudence at avoiding unnecessary vaccinations/mercury/whatever. But you have no way of knowing when and if you will be exposed to the infectious agents of that disease and, in many cases, have little to no control over whether that happens. Young people generally have fewer health issues than older people. That's great until you discover that you happen to be one of those young people who do have a serious health issue. Also, you gradually get a little less young with each passing moment and the wake-up call that you need health coverage may end up being a preexisting condition that then won't be covered by many insurers in a private, profit-driven system.
- blahedo 15y ago
  > Yet many young people in no way require the amount of health coverage older people do. Why should they be forced to buy into something they don't need? Young people in no way require the amount of health coverage older people do, until they do. And the time at which they do is largely unknown---there are probabilities, but it's still a big gamble. And because in practice when they lose the gamble they get caught in a safety net (i.e. the emergency room at the hospital), people that aren't paying in are really just freeloading. So to answer your question, they aren't. They're being forced to buy into something they do need, but don't admit they need. (...and maybe can't easily afford, which is also a problem, but a separate discussion.)
- emu 15y ago
  I'm Australian, age 29, in excellent health, and living in the US. I currently have quite good health insurance. However, if I found myself in a situation in the US where I did not have health insurance, I would try to move back home as soon as I could. To me, it seems laughably risky that anyone would voluntarily not have health insurance. (I realize there are many reasons why people might involuntarily not have insurance.) Illness can happen at any time to otherwise healthy people with no warning, and if that happens you are royally screwed if you don't have insurance. Someone I know was diagnosed a month or so ago with stage 4 cancer. They had no symptoms, and it was only found by a diagnostic test administered by a cautious doctor. They now need hundreds of thousands of dollars worth of treatment, although fortunately they are insured. You simply have no way of knowing when your luck will turn.
jacoblyles 15y ago
If your startup has 5-6 people, then you will have no problem getting a group health insurance plan in the US. Health insurance is really only a problem for very small pre-funding startups. In practice, it doesn't seem to be that big of a deal. So far, the center of the tech startup universe seems firmly rooted in Silicon Valley and in no danger of moving to France, Canada, Australia, or Cuba, despite universal public health care in each of those countries. This is a point that gets a lot of rhetorical attention with little substantial evidence to back it up. In practice, if you're not resourceful enough to figure out a way to bridge the 6-12 months or so you need to build your startup to a point where it can provide insurance, then you just plain aren't resourceful enough to be an entrepreneur.
temphn 15y ago
Actuarially speaking, young people just don't get that sick or need that much healthcare. Also, people doing startups tend to be risk-takers and are usually already risking their life savings. So this is really not a barrier.

Shivetya 15y ago

Yet many young people in no way require the amount of health coverage older people do. Why should they be forced to buy into something they don't need? Each year we go through our health care presentations we have numerous people asking to opt out but they aren't allowed. Yes it weighs on the minds of many, but not all. I am all the more willing to pay as you go on my health care but I would prefer to see reasonable coverage for catastrophic care which is what really becomes expensive.

run4yourlives 15y ago
The whole point of health insurance - nay, insurance in general - is the idea that the well fund the sick in part, because being sick costs so much money. If all the young healthy people opted out, you'd have pools full of old sick people, and rates would be so bad, there wound't be much of a point. With insurance, you need a large element of people that are essentially paying into the service for no benefit in order to insure the risk. That's the whole idea.
- anamax 15y ago
  > The whole point of health insurance - nay, insurance in general - is the idea that the well fund the sick in part, because being sick costs so much money. Actually, no. The idea of insurance is that you pay a slight premium over your expected costs in order to avoid getting hit by variance. (The slight premium is to pay transaction costs.) Healthy people paying for sick people is subsidy, even if you hide the subsidy behind the label "insurance". Being "older", I'm all for today's young people subsidizing older people. I wonder if the next group of young people will feel like subsidizing the current group when the current group gets old, but that's not my problem.
  - run4yourlives 15y ago
    That might be the RNC's talking points of how insurance works, but given that I'm in the industry, I can tell you that insurance exists to offset risk by spreading costs over a pool of people. The concept of "risk" by default means that certain people will never utilize the service. Premium is a factor of the risk analysis, not a transaction fee. This works very well for concepts like auto or home insurance: most people will - in a given year - never actually crash their cars or destroy their homes. The premium they pay is based on the risk profile of one of these things happening to them, and overall to the pool. Health insurance is a little different, but the concepts remain the same. The only real difference between a nationally run program and several private programs - assuming a level of administrative competency - is the size of the pool. The larger the pool, the less the risk, the cheaper the average premium. You can call it dirty words and all, but if you are against the concept of national insurance programs as a principle, you should really evaluate your view of insurance in general, since you're "subsidizing" people who crash their cars, have house fires, pick the wrong banks etc, etc. As an aside: I'm in Canada. As such you might find it interesting that while I believe the US system isn't using the full potential of the available pool, I believe our system has forgotten a lot of the concepts that sustain the insurance industry by just declaring medical care a "right" despite the costs. Both of our countries would be better served by abandoning ideologies here.
    - anamax 15y ago
      > That might be the RNC's talking points of how insurance works, but given that I'm in the industry, I can tell you that insurance exists to offset risk by spreading costs over a pool of people. Both insurance and subsidies (as I described them) spread risks over a pool. The difference is in how we charge folks in the pool. If we charge them by their expected cost, it's insurance. If we charge some people significantly more than their expected cost so we can charge others less, the first group is subsidizing the second. And no, the fact that I don't have a claim doesn't imply that I'm subsidizing anyone any more than the fact that someone hits the lottery implies that lotteries are a good bet. The relevant question is how my cost of "insurance" compares to my expected claims. There is value in reducing variance - I'd rather pay $600/year for 10 years instead of paying $5800 one year and nothing for 9 years. And, I'm willing to take the chance that I'd never pay anything to avoid the hit of paying $5800 twice and nothing 8 times. (In this example, I'm paying $200 so I'm not subject to variance.) However, I'm a lot less willing to pay $600/year if I think that my expected costs are $1k once every 10 years. That's the problem with subsidies disguised as "insurance". The rational response is to try to get out of the pool. > Premium is a factor of the risk analysis, not a transaction fee. I didn't refer to insurance premiums, I referred to the fact that maintaining a pool has costs which the payments must cover in addition to the losses. > The larger the pool, the less the risk, the cheaper the average premium. That's simply not true. My risk of having a car accident does not depend on how many people are in "the pool". There can be economies of scale in the costs of maintaining the pool, but they have nothing to do with risk. > if you are against the concept of national insurance programs as a principle, you should really evaluate your view of insurance in general, since you're "subsidizing" people who crash their cars, have house fires, pick the wrong banks etc, etc. I'm not against insurance. However, subsidies have issues and it is dishonest to claim otherwise and confuse the two.
briandon 15y ago
It's like opting out of vaccinations for fatal/life-threatening diseases. As long as you don't contract that disease, you'll be fine and patting yourself on the back regarding your prudence at avoiding unnecessary vaccinations/mercury/whatever. But you have no way of knowing when and if you will be exposed to the infectious agents of that disease and, in many cases, have little to no control over whether that happens. Young people generally have fewer health issues than older people. That's great until you discover that you happen to be one of those young people who do have a serious health issue. Also, you gradually get a little less young with each passing moment and the wake-up call that you need health coverage may end up being a preexisting condition that then won't be covered by many insurers in a private, profit-driven system.
blahedo 15y ago
> Yet many young people in no way require the amount of health coverage older people do. Why should they be forced to buy into something they don't need? Young people in no way require the amount of health coverage older people do, until they do. And the time at which they do is largely unknown---there are probabilities, but it's still a big gamble. And because in practice when they lose the gamble they get caught in a safety net (i.e. the emergency room at the hospital), people that aren't paying in are really just freeloading. So to answer your question, they aren't. They're being forced to buy into something they do need, but don't admit they need. (...and maybe can't easily afford, which is also a problem, but a separate discussion.)
emu 15y ago
I'm Australian, age 29, in excellent health, and living in the US. I currently have quite good health insurance. However, if I found myself in a situation in the US where I did not have health insurance, I would try to move back home as soon as I could. To me, it seems laughably risky that anyone would voluntarily not have health insurance. (I realize there are many reasons why people might involuntarily not have insurance.) Illness can happen at any time to otherwise healthy people with no warning, and if that happens you are royally screwed if you don't have insurance. Someone I know was diagnosed a month or so ago with stage 4 cancer. They had no symptoms, and it was only found by a diagnostic test administered by a cautious doctor. They now need hundreds of thousands of dollars worth of treatment, although fortunately they are insured. You simply have no way of knowing when your luck will turn.

jacoblyles 15y ago

If your startup has 5-6 people, then you will have no problem getting a group health insurance plan in the US. Health insurance is really only a problem for very small pre-funding startups. In practice, it doesn't seem to be that big of a deal. So far, the center of the tech startup universe seems firmly rooted in Silicon Valley and in no danger of moving to France, Canada, Australia, or Cuba, despite universal public health care in each of those countries. This is a point that gets a lot of rhetorical attention with little substantial evidence to back it up. In practice, if you're not resourceful enough to figure out a way to bridge the 6-12 months or so you need to build your startup to a point where it can provide insurance, then you just plain aren't resourceful enough to be an entrepreneur.

temphn 15y ago

Actuarially speaking, young people just don't get that sick or need that much healthcare. Also, people doing startups tend to be risk-takers and are usually already risking their life savings. So this is really not a barrier.