A Shot in the Arm: How Job Lock Hurts Entrepreneurs

http://www.washingtonmonthly.com/features/2009/0905.gruber.html

by sachinag • 17 years ago

24 34 17 years ago

sachinag• 17 years 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."

tptacek9• 17 years 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.

philwelch2• 17 years 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.

tptacek9• 17 years 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.

run4yourlives4• 17 years ago

if you decline maternity coverage you have a lot better luck.

As a Canadian I'm left saying, WTF America?

I've had two children in the last 2 1/2 years, wife delivered both via C unscheduled. Total cost directly to me: $0.

jhancock2• 17 years ago

It seems you are trying to argue the case that health insurance is not "insurance" in the way other instruments are. I think we all get that. There are certainly better words, but that's the word commonly used and I think most people can context switch between "insurance" for theft of your Van Gogh and "insurance" for pregnancy.

I had a good conversation with my closest friend, an obstetrician, a month ago. After lots of discussion on what may happen with health care reform, he told me he thought most everyone would be best served if there were no institutions around any aspect of health care and every aspect was pay-out-of-your-pocket as it once was. He may be right, but you can't put the genie back in the bottle. The "country doctor" is a great metaphor for what was and what maybe should be, but there are numerous reason why we can't go back.

Like it or not, society pays for lots of things that are not evenly shared: the roads you drive on, the schools you attend, the court systems that protect people that wind up in law suits, the meat inspectors that are paid by government funds when clearly some people don't eat meat. The list goes on. This is not the root of the problem. Public compromise is part of the grand beauty of living in a diverse ecosystem.

I agree health care is far too complex and there should be more simple and competitive options. All I can say is if you want that, you probably need to spend more time being a part of ensuring for a larger pool of honest people that work in government. What we will get out of this new health care bill (if it does pass) will look like your typical big piece of congressional sausage. Your tired of congressional sausage? All I can recommend is to spend more effort getting honest brokers into Congress.

jdminhbg5• 17 years 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• 17 years 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.

jdminhbg5• 17 years 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.

jhancock2• 17 years ago

yep, the "revoked arbitrarily" aspect seems to not be well understood by most.

anigbrowl• 17 years ago

"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."

I think people have missed this point. It's not as if there's a single-payer proposal working its way through Congress, although I think there ought to be. Health insurance sucks; even people who have it are often reluctant to visit the doctor in case it impacts its future coverage although this may result in a loss of economic productivity. A single-payer system will not deliver the desired results to everyone all of the time, but at least it won't treat people as if past illness were somehow a breach of contract.

Certainly, singe-payer means everyone paying a bit more tax to subsidize the least healthy, and if taxes are high enough the risk-/reward ratio of individual private enterprise becomes uneconomic. But if the required tax increases are modest, the benefits for job mobility and general financial security (vs medically-related bankruptcy) will more than outweigh the cost.

Right now an individual's medical problem all too often becomes a financial and legal problem as well. It seems to me that decisions with legal and financial aspects which must be taken in order to obtain medical treatment are made under duress. I had to have emergency medical attention last year and I really wonder about the enforceability of contracts I signed while puking and under the influence of morphine. And I had a good experience overall (no complications, not huge unexpected bills, quick recovery). Given how Kafkaesque the situation is for a good outcome, I shudder to think what it must be like for someone with a deadly or chronic condition.

brc2• 17 years 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.

run4yourlives4• 17 years ago

If you employ someone you should really consider a form of group insurance, as both theirs and your rates would be cheaper.

brc2• 17 years 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?

A Shot in the Arm: How Job Lock Hurts Entrepreneurs

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