5 ms·

A Shot in the Arm: How Job Lock Hurts Entrepreneurs

24 points by sachinag 17y ago

sachinag 17y ago
Here, actual proof - from an MIT economist - that health care is hurting entrepreneurship. Money quote: "Americans who have an alternative source of health insurance, such as a spouse’s coverage, are much more likely to be self-employed than those who don’t. Wellington estimates that universal health care would therefore likely increase the share of workers who are self-employed (currently about 10 percent of the workforce) by another 2 percent or more."
tptacek 17y ago
This seems to me to be self-evident. Before we got (expensive) group health insurance, we lost a large portion of our most promising candidates over health insurance concerns. I say this on HN constantly because it bears repeating: if you want to understand the problem with the current health insurance system, assume that a normal family of four cannot get private health care coverage at any reasonable price, or in some locales at all. It doesn't matter how much extra you pay your employees. There are many reasons, a bunch of which devolve to "we don't want to cover women with functioning uteruses", why a typical family cannot get covered outside the group coverage system.
- philwelch 17y ago
  The situation varies from state to state--if you decline maternity coverage you have a lot better luck. Of course, you also better not have kids (or save up for them when you do have them!), which is morally/emotionally difficult in the edge case that you get pregnant. This approach is also more compatible with the concept of "insurance" to begin with! I have never seen any sense in paying an insurance company to pay the doctor for your own routine care--shouldn't it be cheaper to just pay the doctor yourself? You buy insurance to level out the variance on unpredictable costs. Having children isn't some type of unpredictable medical emergency we buy insurance against, it's a voluntary decision with a relatively predictable cost. There's no sense in buying or selling maternity coverage. Group coverage is just a way for those of us who don't have kids to subsidize those of us who do. I think a mandate for insurance companies to ignore preexisting conditions, traded off against a mandate to buy health insurance, would be a sensible tradeoff for all parties. I think allowing competition between states would provide a better environment. I think there are good reasons for reform. I don't think maternity coverage needs to exist, I highly doubt it makes financial sense for insurance to cover routine care, and I don't think insurance should be bundled with employment.
  - tptacek 17y ago
    Pregnancy isn't the only issue, and it wasn't the issue in our case. You'll forgive me for not getting into more detail here. It is not as simple as "we don't want to subsidize pregnancy" (I sympathise with that). It's "women of childbearing age are more expensive to cover for a variety of reasons". Despite a total lack of chronic medical problems in my family, declining maternity coverage would not have helped us. So let's lose that red herring. Do I agree that the government shouldn't have to pay for routine predictable medical expenses? Of course I do. I understand the concept of insurance (to avoid catastrophic losses from rare events), and I also understand how totally distorted our health care system is because of the twisted incentives and lack of transparency in the private employer-funded health insurance system. I'm not wishing for the NHS, but I'm also not naive enough to think that one regulatory tweak (guaranteed issue) is going to solve our problems. Finally, if you have a problem with the idea that the young, healthy, and fortunate are subsidizing the old, infirm, and poor, you need to revisit the entire concept of insurance. People who avoid acquiring insurance in their 20s --- all of whom will certainly try to get coverage in their late 30s --- are free-riding.
    - jdminhbg 17y ago
      The twentysomething "freeriders" are overwhelmingly the source of startup founders. If you want to force them to subsidize older people, that's fine, but it's not going to have the effect of increasing entrepreneurship, which is ostensibly the point of the article.
      - tptacek 17y ago
        Did you read the article, or do you just have strong opinions about health care? Either way is fine, but the point of the article is that one of the reasons twentysomethings are a huge fraction of startup founders is that they aren't locked into jobs by health insurance. (It is also, by the way, simply not the case that twentysomethings are overwhelmingly the source of startup founders; what they do seem to be is an overwhelming source of YC company founders. Go make a list of 10 VCs, read their portfolios, and go look at the "Management Team" sections on their websites.)
jdminhbg 17y ago
This is only a good point if you assume that the current proposals magically provide free health care to you when you quit your job. "Universal coverage" as currently being debated just mandates that you purchase coverages and penalizes you with a tax if you don't; even with a "public option" you still have to pay for said option. If you want to argue that tax-supported single-payer systems give you more freedom to quit your job and start a startup, fine, but nothing currently proposed in the US does that.
- dasil003 17y ago
  You obviously have not experienced how bad the situation is. For many people it is literally impossible to get health care coverage if their job does not provide it. The difference between paying $0 and $200/month (especially when the first option is tax-subsidized) is trivial compared to the current situation where any "insurance" individuals are graced with being allowed to purchase can be revoked arbitrarily. So, please, get your facts straight.
  - jdminhbg 17y ago
    I have experienced it, because I quit my job and got my own health coverage to work as a freelancer. If you think that $200 a month is what mandated insurance will cost a family of 4 who aren't Medicaid-poor, I don't know what to tell you.
    - aichcon 17y ago
      Curious, could you please share how you are covered and the cost? COBRA, Freelancer's Union, something else?
      - tptacek 17y ago
        Tangent: COBRA is a really bad idea too. First, COBRA is probably more expensive than health care you acquire yourself, because most employers acquire highest-common-denominator coverage and hide the expense in payroll and benefits accounting. Second, COBRA has a ticking time limit on it, which is exactly what you don't want with health insurance (and why you never want month-to-month or temporary coverage). You might as well not insure yourself if any catastrophic event is as likely to bankrupt you with insurance as without it, which is what happens when something bad happens in the latter part of your COBRA term.
brc 17y ago
As a citizen of a country with universal health care, I can tell you that health care didn't even enter my head when I elected to become self employed and start my own company. 1. I don't need health insurance if I'm happy to be covered under the public system. Nobody goes bankrupt from healthcare costs in my country. 2. Because of universal coverage, purchasing private healthcare for my family costs about $200/month, and it's a personal policy, not an employer based policy. 3. If I employ someone I don't even have to have a discussion with them about healthcare. It is assumed they will sort out their own health insurance, the same as they sort out their own car insurance. There is no doubt that health insurance has an effect on entrepreneurship and new company formation when it is one of the highest startup costs, that needn't even exist. I mean, before I started reading threads like this in HN, the thought never even entered my head.
- run4yourlives 17y ago
  If you employ someone you should really consider a form of group insurance, as both theirs and your rates would be cheaper.
  - brc 17y ago
    No, I don't think you read my comment correctly. I don't need group insurance because the rates any employees would be perfectly capable of electing whether or not to have private cover, and most likely will have an existing policy not tied to any particular employer. The whole point is disconnecting jobs and health - there is no logical reason to connect these. I wouldn't expect my job to pay for my house insurance, why would I expect it to cover my health insurance?

24 points by sachinag 17y ago

Here, actual proof - from an MIT economist - that health care is hurting entrepreneurship. Money quote: "Americans who have an alternative source of health insurance, such as a spouse’s coverage, are much more likely to be self-employed than those who don’t. Wellington estimates that universal health care would therefore likely increase the share of workers who are self-employed (currently about 10 percent of the workforce) by another 2 percent or more."

tptacek 17y ago

This seems to me to be self-evident. Before we got (expensive) group health insurance, we lost a large portion of our most promising candidates over health insurance concerns. I say this on HN constantly because it bears repeating: if you want to understand the problem with the current health insurance system, assume that a normal family of four cannot get private health care coverage at any reasonable price, or in some locales at all. It doesn't matter how much extra you pay your employees. There are many reasons, a bunch of which devolve to "we don't want to cover women with functioning uteruses", why a typical family cannot get covered outside the group coverage system.

philwelch 17y ago
The situation varies from state to state--if you decline maternity coverage you have a lot better luck. Of course, you also better not have kids (or save up for them when you do have them!), which is morally/emotionally difficult in the edge case that you get pregnant. This approach is also more compatible with the concept of "insurance" to begin with! I have never seen any sense in paying an insurance company to pay the doctor for your own routine care--shouldn't it be cheaper to just pay the doctor yourself? You buy insurance to level out the variance on unpredictable costs. Having children isn't some type of unpredictable medical emergency we buy insurance against, it's a voluntary decision with a relatively predictable cost. There's no sense in buying or selling maternity coverage. Group coverage is just a way for those of us who don't have kids to subsidize those of us who do. I think a mandate for insurance companies to ignore preexisting conditions, traded off against a mandate to buy health insurance, would be a sensible tradeoff for all parties. I think allowing competition between states would provide a better environment. I think there are good reasons for reform. I don't think maternity coverage needs to exist, I highly doubt it makes financial sense for insurance to cover routine care, and I don't think insurance should be bundled with employment.
- tptacek 17y ago
  Pregnancy isn't the only issue, and it wasn't the issue in our case. You'll forgive me for not getting into more detail here. It is not as simple as "we don't want to subsidize pregnancy" (I sympathise with that). It's "women of childbearing age are more expensive to cover for a variety of reasons". Despite a total lack of chronic medical problems in my family, declining maternity coverage would not have helped us. So let's lose that red herring. Do I agree that the government shouldn't have to pay for routine predictable medical expenses? Of course I do. I understand the concept of insurance (to avoid catastrophic losses from rare events), and I also understand how totally distorted our health care system is because of the twisted incentives and lack of transparency in the private employer-funded health insurance system. I'm not wishing for the NHS, but I'm also not naive enough to think that one regulatory tweak (guaranteed issue) is going to solve our problems. Finally, if you have a problem with the idea that the young, healthy, and fortunate are subsidizing the old, infirm, and poor, you need to revisit the entire concept of insurance. People who avoid acquiring insurance in their 20s --- all of whom will certainly try to get coverage in their late 30s --- are free-riding.
  - jdminhbg 17y ago
    The twentysomething "freeriders" are overwhelmingly the source of startup founders. If you want to force them to subsidize older people, that's fine, but it's not going to have the effect of increasing entrepreneurship, which is ostensibly the point of the article.
    - tptacek 17y ago
      Did you read the article, or do you just have strong opinions about health care? Either way is fine, but the point of the article is that one of the reasons twentysomethings are a huge fraction of startup founders is that they aren't locked into jobs by health insurance. (It is also, by the way, simply not the case that twentysomethings are overwhelmingly the source of startup founders; what they do seem to be is an overwhelming source of YC company founders. Go make a list of 10 VCs, read their portfolios, and go look at the "Management Team" sections on their websites.)

jdminhbg 17y ago

This is only a good point if you assume that the current proposals magically provide free health care to you when you quit your job. "Universal coverage" as currently being debated just mandates that you purchase coverages and penalizes you with a tax if you don't; even with a "public option" you still have to pay for said option. If you want to argue that tax-supported single-payer systems give you more freedom to quit your job and start a startup, fine, but nothing currently proposed in the US does that.

dasil003 17y ago
You obviously have not experienced how bad the situation is. For many people it is literally impossible to get health care coverage if their job does not provide it. The difference between paying $0 and $200/month (especially when the first option is tax-subsidized) is trivial compared to the current situation where any "insurance" individuals are graced with being allowed to purchase can be revoked arbitrarily. So, please, get your facts straight.
- jdminhbg 17y ago
  I have experienced it, because I quit my job and got my own health coverage to work as a freelancer. If you think that $200 a month is what mandated insurance will cost a family of 4 who aren't Medicaid-poor, I don't know what to tell you.
  - aichcon 17y ago
    Curious, could you please share how you are covered and the cost? COBRA, Freelancer's Union, something else?
    - tptacek 17y ago
      Tangent: COBRA is a really bad idea too. First, COBRA is probably more expensive than health care you acquire yourself, because most employers acquire highest-common-denominator coverage and hide the expense in payroll and benefits accounting. Second, COBRA has a ticking time limit on it, which is exactly what you don't want with health insurance (and why you never want month-to-month or temporary coverage). You might as well not insure yourself if any catastrophic event is as likely to bankrupt you with insurance as without it, which is what happens when something bad happens in the latter part of your COBRA term.

brc 17y ago

As a citizen of a country with universal health care, I can tell you that health care didn't even enter my head when I elected to become self employed and start my own company. 1. I don't need health insurance if I'm happy to be covered under the public system. Nobody goes bankrupt from healthcare costs in my country. 2. Because of universal coverage, purchasing private healthcare for my family costs about $200/month, and it's a personal policy, not an employer based policy. 3. If I employ someone I don't even have to have a discussion with them about healthcare. It is assumed they will sort out their own health insurance, the same as they sort out their own car insurance. There is no doubt that health insurance has an effect on entrepreneurship and new company formation when it is one of the highest startup costs, that needn't even exist. I mean, before I started reading threads like this in HN, the thought never even entered my head.

run4yourlives 17y ago
If you employ someone you should really consider a form of group insurance, as both theirs and your rates would be cheaper.
- brc 17y ago
  No, I don't think you read my comment correctly. I don't need group insurance because the rates any employees would be perfectly capable of electing whether or not to have private cover, and most likely will have an existing policy not tied to any particular employer. The whole point is disconnecting jobs and health - there is no logical reason to connect these. I wouldn't expect my job to pay for my house insurance, why would I expect it to cover my health insurance?