Will universal health care motivate the 'job-locked' to start businesses?

http://www.post-gazette.com/pg/09196/983864-28.stm

by edw519 • 17 years ago

33 79 17 years ago

Oh I hope so.

This is an excerpt from a blog I wrote on this exact issue. It was on Myspace which I don't expect anyone to want to log into to so I have just copied and pasted.

" As an immigrant to the US, it took me years to realize that many Americans stayed in shitty jobs because they were afraid to lose their health care.

Well, it's almost 20 years later and I have had health care for about two of them, none recently, and I still won't keep a shitty job over health care. In fact I have owned my own business for the other 18 years and … wait for it…..STILL DON'T have health care.

Why? Because it's a bad deal. A sucker deal, because it's not really health care, it's insurance and insurance companies are money grubbing, fear mongering scumbags.

I used to have affordable product liability insurance, and then they tripled the price post 9/11, because…….terrorists were gonna, what, ummm, file frivolous lawsuits? Please, that was the last straw.

Insurance sucks. It costs a fortune, health, auto, liability, property, it's all a bad deal, if you self insured on most of them or just absorbed your losses. On an actuarial basis 99 percent of people would come out ahead, vs. paying premiums their whole lives. That one percent? Well in my world, we have benefits and it seems to work out.

But, that's too scary if you grew up with "The Fear" that every American gets indoctrinated with.

I'll probably die of untreated cancer which is just a guess at this point, but the freedom I have now by not having to pay for all that insurance is worth it.

Don't misunderstand, some I legally have to have, auto, workers comp, but the rest I let lie. In exchange for taking this risk, I have been able to pursue my not so lucrative dreams.

I would love to see nationalized health care, not so much for myself, but just to see my friends be able to leave "The Fear" behind and be able to follow their dreams.

I love America. Here's to better times. Soon."

biohacker42• 17 years ago

As an immigrant to the US, it took me years to realize that many Americans stayed in shitty jobs because they were afraid to lose their health care.

I second this personal anecdote. I bet other can say the same. I vague recall a study about this, but google fails me.

profquail7• 17 years ago

As much as I disagree with the unbridled spending that has been going on in Washington recently (but is just continuing a trend from the past several administrations), I just don't see any non-selfish reasons why someone would argue against having universal healthcare.

I mean, it's the 21st century! We were supposed to have flying cars and such already, but there's still tens of millions of people in our country that can't get treatment for even minor illnesses (which, untreated, can worsen and bring on deadly complications).

The only thing that I'm afraid of in this case (other than the cost) is that the system becomes too bureaucratic, where most people continue to use private doctors simply because there's too much "red tape" to get treated in a public facility.

DanielBMarkham2• 17 years ago

I just don't see any non-selfish reasons why someone would argue against having universal healthcare.

How about "my kids can't afford it"

Or "increasing demand while keeping supply constant will NOT lower costs"

Or "I should have the freedom to come up with a million-dollar-per-ill cure for cancer and not have the government take it"

None of these are selfish.

I've got others, if you'd like to hear them.

dan_the_welder9• 17 years ago

Damn right, where is my flying car!

Seriously though, we are getting to a breaking point on several issues of which health care is just one.

Vested interests have legislative lock ins that create huge barriers to entry for new players.

The avenues for entrepreneurial success get narrower every year.

That's not the American Dream, that is a nightmare.

Creative destruction is desperately needed.

jerf2• 17 years ago

Nobody worth listening to is saying, "Hey, I don't want that guy to have health insurance! I want that guy to die in pain!"

It's just that when you get past the touchy-feely "Nobody should be poor! Everybody should have health care! Why can't we all just get along‽", and down into the real world of economics and finite resources, it's not so easy. It isn't all that hard to create a universal health care system that is worse than the one we have now, and there are all kinds of other issues, too.

You might get me to sign up for health-care vouchers provided from the government if you really insist, but all current proposals seem to just beg for further increasing costs as the health care industry is further isolated from pricing signals and beg even harder for regulatory capture within five years by the already-powerful health care lobby. (The idea that the medical lobby will be defanged by centralizing all the power is so absurd I can't believe anybody who can think the words "regulatory capture" can believe it for more than five seconds without bursting out in laughter.)

sp332• 17 years ago

Here's one: I don't want to watch my friends and family get poorer as they pay for my (potential) future illness.

mattobrien2• 17 years ago

You're afraid health care will become too bureaucratic? Are you familiar with health insurance companies? There's already a bureaucrat between you and your doctor - the fact that he's from the private sector doesn't change that fact.

And private sector bureaucrats have an incentive to deny coverage, purge rolls, etc. - it means greater profits. In the last twenty years, health insurance companies have gone from spending 95 cents of every premium dollar on health care to roughly 80 cents today. Where did that extra money go? Greater overhead and profits. Under a universal system, public bureaucrats wouldn't have the same incentives to deny care.

Just a friendly reminder that before you start spouting cliches about "bureaucrats ruining things" you should ask whether they already have - just not from the government.

roc2• 17 years ago

You sound like a good guy. I hope you never get sick while uninsured in America.

I too have spent a majority of my life without health insurance. I just haven't been as lucky. The Fear is truly unfortunate, but there's a reason people have it and it's not blind indoctrination.

dan_the_welder9• 17 years ago

Me too, and I am sorry for whatever you have had to deal with.

It is an embarrassment that you have had to deal with potentially huge financial repercussions in one of the richest and most technologically advanced countries in the world.

I agree that there are reasons to have the fear. Don't get me wrong, I have Alzheimer's and some interesting cancers in my family history, so I have some of the fear.

I don't exactly know how to phrase this, but did you actually have a choice, either financially or in terms of being true to your desires?

Do you have regrets?

mattchew2• 17 years ago

Not to be rude, but it doesn't look like you have been paying much attention to what Universal Health Care in the U.S. will actually mean.

I legally have to have, auto, workers comp [...]

And now you will legally have to have health insurance.

Insurance sucks. It costs a fortune, health, auto, liability, property, it's all a bad deal [...]

You have a bad attitude, but the health insurance companies won't have to worry about it much longer. You'll be paying up with the rest of the citizen-units.

Well, you thought you wanted Universal Coverage. You got it. Go America! Land of the free!

dan_the_welder9• 17 years ago

Yes, I am going to be pissed if we end up with the Massachusetts solution.

Just curious, are you working a job or are you making a go of it with your software biz?

crux_• 17 years ago

I'm not advocating getting health insurance, exactly, but your life as you know it will end if you get seriously sick or injured. (Exception: if you have millions in the bank you're probably just fine.)

Personally I'm paying for health insurance, but only the bare minimum (rather high deductible). I consider it my rock climbing tax: insurance can give you some freedoms (the freedom to take a bit of extra risk, in this case) as well as take them away.

theoneill• 17 years ago

Doesn't seem to in Europe.

jrbedard• 17 years ago

nor as in Canada!

myth_drannon• 17 years ago

The same applies to Canada. I don't think canadians are more enterprenual than americans

cperciva• 17 years ago

I don't think canadians are more enterprenual than americans

Perhaps not; but we might be even less entrepreneurial without universal health care. I know I would never have started working on tarsnap if I was living in the US.

tptacek10• 17 years ago

Apples-to-oranges. Most European countries have many other obstacles to starting a business. It can be almost impossible to fire workers. Some places have mandatory short work weeks. France apparently has special police that monitor them! There have been onerous regulations about running small businesses from your house. The tax code is different and often less favorable to small businesses. And the cultural climate is "famously" hostile to entrepreneurs.

You can't extrapolate the outcome of universal health care in the States from Europe's experience. The conclusion that universal health care would hurt entrepreneurship (or even fail to help it) remains counterintuitive.

roc2• 17 years ago

Start businesses? Probably not. That's something a minority will ever do.

But -join- small businesses? Yes.

Labor will become far more mobile and small business will be on more-equal footing if they aren't forced to pay more for competitive benefits packages.

That's A Good Thing(tm).

profquail7• 17 years ago

I think more people would start their own businesses (not many, but more than now), simply because they could continue to work part-time somewhere to bring in money while growing their business. Part-time jobs usually don't offer health care benefits, so as of now it's either: (a) stay at current job full time for health benefits, and work on the business after hours, or (b) quit, have no health benefits, and work full time on the business in order to get up and running as quickly as possible (potentially at the cost of skipping important parts of the development process, marketing, etc.)

dan_the_welder9• 17 years ago

Labor mobility is broken and it is a huge problem with American capitalism.

Working for a small business is great, I have enjoyed and learned at everyone that I have worked for.

Now that I am the small business owner, my employees are my family. If I were to behave like a corporate employer I would be a lonely man.

jobu• 17 years ago

Until recently, Labor Mobility was helped greatly by the housing boom - anyone could sell their house with little economic impact and move to a better job in a different area.

Now we have the double-whammy of a housing bust and astronomical health care costs. Cobra helps, but it only lasts 18 months, and that's definitely not long enough to build a successful business.

tptacek10• 17 years ago

The argument isn't that a majority of people would start small businesses with health insurance. It's simply that more people, in absolute terms, would.

Again, I don't see how this could not be the case. The same dynamic that keeps the head of a family of 4 from joining a startup keeps that same person from starting a startup. There are fewer start-ers than join-ers, but they face the same obstacle.

thelonecabbage2• 17 years ago

If you start with 3 other co-founders, you can get the same deal (mostly) that your employer gets.

Also HSA's and high deductible health plans are likely to cost less than paying out for "Universal" coverage. Best yet, is that these solutions don't suffer from a tax-drag on entrepreneur ship that the article is so concerned with.

DenisM• 17 years ago

How would you go about finding such coverage (for 3 founders)?

davidmabe• 17 years ago

Just call an insurance broker. I recently went shopping for health care coverage expecting the worst and was pleasantly surprised how close the quotes were to my employer provided plan.

I took away from it a feeling that I am less stuck than I thought I was, even before universal health care.

utnick• 17 years ago

that works as long as your 3 co-founders are relatively healthy and have been healthy their whole lifes, if one of them develops a problem you can expect your premium to skyrocket into unaffordability

thelonecabbage2• 17 years ago

Group health care plans (what your employer gives you) are given largely without consideration for the health of the individuals involved. Basic tests, like making sure you don't have a major heart problem and pee tests are involved but thats it. Friends of mine who have a business with only 3 employees listed me as one of their employees to get the number up to four. Some how I was registered whilst living in another country.

And I believe there are already laws on the books about pre-existing conditions (assuming you have continuous coverage)

CWuestefeld6• 17 years ago

It's worth remembering that the relationship between health insurance and employment is entirely due to government meddling in the first place.

Up through the fist half of the 20th Century, medical expenses were generally paid individually, or through mutual-aid groups such as churches or fraternal societies. This began to change when the government instituted wage freezes. In that environment the only way for an employer to attract superior talent was to offer non-salary benefits, and the tax advantages of health care made that an attractive one.

Thus, American employers began to offer health insurance as a way to better compensate their workers when the government was trying to interfere with the labor market. As the practice became more common, it increasingly became a point that job hunters would look for. And the rest is history.

If you think that the results of this meddling are undesirable, then you might think twice about giving the same meddlers the authority to muck things up further.

Edit: here's a bit on FDR's wage freeze and its effect on health insurance: http://faculty.smu.edu/tmayo/health%20care%20timeline.htm

jfoutz• 17 years ago

Can you elaborate more? A (cursory) google search didn't really come up with anything about US wage freezes. there was a bit about price controls for 90 days when we came off the gold standard... that doesn't seem like the kind of problem you're describing.

fwiw, it looks like white male lifespan went up a ton in the first half of 20th century, 48 to 66, 37%! vs 66 to 74, just 12%. I'm pretty sure each 1 percent is exponentially harder than the last though.

ckinnan• 17 years ago

The change came from wage controls during the Second World War. Ever since, employer-provided care is paid with pre-tax dollars while most private insurance outside of the workplace is paid with after-tax dollars. That's a huge penalty.

http://books.google.com/books?id=_TRBtKwBr4oC&pg=PA261&#...

It is also illegal to buy health care insurance across state lines, so it isn't a competitive national marketplace.

We need to make health care more market oriented, not less.

CWuestefeld6• 17 years ago

Sorry. While you were asking, I was editing my OP to include a reference. here's a bit on FDR's wage freeze and its effect on health insurance: http://faculty.smu.edu/tmayo/health%20care%20timeline.htm

Google "roosevelt wage freeze" for more on the freeze itself.

potatolicious• 17 years ago

I think your link between wage freezes and the rise of health insurance is tenuous at best. I was born in an Asian country that traversed a similar path from self-pay to health insurance to (now) public health care - and wage freezes were simply not an issue there.

This has nothing to do with meddling, and everything to do with the fact that self-pay health care bankrupts people, creates sick populations, and insurance is unaffordable to anyone but employers.

CWuestefeld6• 17 years ago

It appears that others find this more than tenuous:

http://www.reuters.com/article/latestCrisis/idUSN21171999 1943: The War Labor Board rules that a wage freeze designed to keep inflation in check during World War II does not apply to health insurance benefits, creating an incentive for employers to provide health insurance as a way to build worker loyalty.

http://books.google.com/books?id=UDWZpSUR1aMC&pg=PA100&#... As a result of wage freezes in the World War II period, group health insurance became an important component of collective bargaining...

Also, it's silly to say that only employers can afford health insurance. Obviously the employer considers the total cost of employing you, including salary, healthcare, FISA taxes, etc. If employers stopped providing health insurance, it's likely that wages would increase (approximately) by the cost of that insurance. Then you'd have that money available.

jonknee• 17 years ago

Modern healthcare is a new innovation though, it's hard to compare it to the past. The term anti-biotic wasn't even coined until the 1940s (Penicillin was still new then). It's not big deal to pay out of pocket when there's not much to pay for.

tptacek10• 17 years ago

I've read this comment 4 times now and I can't find anything constructive in it. People are manifestly restrained from entrepreneurship because of private health insurance in the US. You don't like the idea of the government stepping in. Fine. What's your suggestion?

Femur2• 17 years ago

The post is pretty clear to me: Healthcare in the US is in the state it is now because of the way government treated it (via regulation and taxation). The GP's link documents this very well.

>You don't like the idea of the government stepping in. Fine. What's your suggestion?

The government stepping out.

drawkbox2• 17 years ago

Healthcare needs to be an independent insurance that companies will pay you in salary to get on your own.

Right now do companies or governments pay your auto insurance? How about home insurance? Why health insurance? It is a tired and wrong way to do things, it removes the cost of insurance and medical care from the paying customer and it is the major reason there is a huge healthcare bubble in cost. We would see a very fast cost correction in healthcare if we treated it like other insurance.

I truly believe if health insurance moves like retirement, away from the employer, then we will have a much more agile workforce and the walls to move around more and be more entrepreneurial will be removed.

tptacek10• 17 years ago

Your analogies are all faulty. You can avoid paying car insurance by not driving. You can avoid paying homeowner's insurance by renting. There is nothing you can reasonably do to ensure that you won't break your leg, lose your appendix, or develop a lymphoma.

Meanwhile, you can't simply buy health insurance. Under our current system, any insurer can refuse to cover you for any number of reasons, or assign calamitously high premiums to you. The medical pretexts required to do this are numerous and opaque. Ask any 30 year old woman who's tried to buy health insurance if you need convincing.

Many people with families simply cannot start or join startups in this climate, because there is no feasible way for them to cover their family. Without health insurance, you can be bankrupted by relatively minor health events; more importantly, you put your family at risk for receiving inferior care, particularly on the preventative side.

dantheman2• 17 years ago

Of course if you are a risk then you should pay more. The correct answer is for those people to rely on public charity to help with their medical bills. What you're advocating is just forcing people to subsidize others. At least with private charity people: 1st are thankful, and realize that others are helping them, and 2nd are controlling how their money is spent.

Insurance shouldn't cover preventive care, it should be insurance. You don't have car insurance that covers getting your oil changed, why should your health insurance cover your doctor visits?

drawkbox2• 17 years ago

You don't think the market would adjust and return to independent groups, companies, systems that organize just like employee groups with employers? Because health insurance is tied to employment some magical force makes insurance companies just cover people?

In my case at least unemployed people or retired people could still keep their healthcare they have always had. Changing jobs and health care is a big pain that prevents innovation and tying healthcare to employment allows price fixing/inflation.

The arguments you put against not tying it to employment are the same arguments for the current setup. They only hide the cost so that it is inflated.

dan_the_welder9• 17 years ago

Right and if you notice there is accident medical in auto insurance, because we HAVE to drive and we can't let the heath uninsured drag the whole system down if they get in a wreck.

Lack of universal coverage is also driving up the cost of automobile insurance.

yummyfajitas3• 17 years ago

An additional problem is that large numbers of people are 'job-locked' by their need to have a regular paycheck.

I wonder if people would also be encouraged to start businesses if we came up with a universal paycheck program.

[edit: could anyone downmodding me explain why? Just curious.]

dan_the_welder9• 17 years ago

Sounds too much like welfare in thread that is already driving the free market "I'll get mine" types insane already.

nkurz• 17 years ago

I downmodded you because at a glance fell into the category of 'dumb joke'. The conversation at the top of the page is interesting, and I want to keep this at the bottom so as not to interrupt distract from the useful discussion. If you intend this as a real insight, please flesh it out with more explanation.

tome• 17 years ago

You sound a little trollish: "universal paycheck program" sounds like a thinly veiled dig at "socialism"

(For the record: I upvoted you)

yummyfajitas3• 17 years ago

My specific point: people are "job-locked" by a desire to keep getting the compensation that their job provides. One form of compensation is medical insurance, another form is pay.

Is there any legitimate reason to single out medical insurance as a particular cause of job-lock, rather than pay, corporate gym membership, etc?

tptacek10• 17 years ago

Anecdotally, I can't see how it could not be the case that universal healthcare will promote startups. In '05 and '06, we routinely lost candidates because they were married and required health insurance. If you've never tried to buy private health coverage for a family of 4, you may be laboring under the delusion that it's possible to actually do that.

Is there a difference between starting a company and joining a small startup? Sure. But the same obstacle confronts any family that wants to start a company. How could removing a huge obstacle to entrepreneurship not help?

TheCondor• 17 years ago

No question about this. It potentially can help any industry where the healthcare costs are high in relation to other costs, this include heavy manufacturing where there are pensions to pay. All provided the tax burden doesn't out weigh everything else. If the collective tax rate was doubled, then that will kill the start-up market.

tptacek10• 17 years ago

When you talk about tax rates and health insurance, it's important to keep in mind the shadow tax paid in the common case by families and businesses that employ them today. Privately-run health insurance is expensive, and there's an inherent adverse selection problem because coverage is discretionary.

lsc• 17 years ago

hang on there; how come a higher tax rate would kill the startup market? A more complex business tax regime, sure, but you are only taxed on your profits and what you pay yourself. You don't pay much in taxes until your company actually starts making money.

Especially considering that capital gains is treated differently (and taxed less) than income, it seems to me like the most advantageous course to take in a time of high taxation is to start a business, and re-invest as much of your profit as possible. Then, at some point sell it and pay capital gains on your winnings. (or perhaps sit on it until tax rates go down a bit.)

Now, obviously a high tax rate will cause people to spend less, but that's going to hurt all businesses, not just startups. From where I stand, as a small company, it seems that I am much better positioned to compete on price than larger companies in my market.

sunir• 17 years ago

From doing a lot of customer dinners in the United States with FreshBooks customers, the absolute top of the list with a bullet number one reason Americans don't quit their day job and start freelancing or start a business is lack of health insurance.

I'd bet most of our customers don't have health insurance, and that's why we push them to professional organizations like the Freelancer's Union and AIGA.

My personal beliefs: It seems counterproductive to me to make citizens risk their entire future just because you wanted to be innovative or fill an unserviced need in society.

Will universal health care motivate the 'job-locked' to start businesses?

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