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.
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...
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.
> 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 have not found this to be true. I run a small company in Florida. We have BlueCross BlueShield. Comparing notes with other employers, big and small, the size of the group does not appear to make a difference. What seems to matter more is the makeup of the group in terms of age, gender, and preexisting conditions.
There is a huge difference between buying individual insurance and qualifying as an employer group of two or more.
Yes, individuals cannot buy health insurance for the same rates that employers pay. Some individuals cannot buy health insurance at all if they have preexisting conditions.
> Some individuals cannot buy health insurance at all if they have preexisting conditions.
That's true only if they let their insurance lapse. As long as they don't do that, they can stay with their current, switch, etc, all without waiting periods or a significant premium relative to "well people". (It's been that way for years.)
That's why I wouldn't let insurance lapse if I had a pre-existing condition, so why do folks with pre-existing conditions let their insurance lapse? Or, are we assuming that they do without cause or that they don't know the rules?
Or, are "we" ranting about the system without knowing rules that don't apply to us?
I have employees who were laid off from their previous jobs. They could not afford to pay the COBRA payment and let their insurance lapse. They are now disqualified from private insurance and have pre-existing conditions that are not covered under our group plan.
It is easy to tell people not to let their insurance lapse. If they have no income, this is not feasible.
The point of the article is that the current system inhibits entrepreneurship. Plenty of employees in the current system stay with their employer out of fear of losing their coverage instead of pursuing other opportunities.
> It is easy to tell people not to let their insurance lapse. If they have no income, this is not feasible.
If they have no income, health insurance isn't their only problem. There's housing and food as well.
> Plenty of employees in the current system stay with their employer out of fear of losing their coverage instead of pursuing other opportunities.
Lots of things have that effect, including having kids, buying a house, and so on. Many of them have far greater effect than pre-existing conditions, yet ....
There are also people who can't take the leap because taxes keep them from saving enough. Increasing their taxes to pay for other people's healthcare is going to make that worse.
None of the proposals address cost. (No, preventative care doesn't actually reduce costs. It "merely" makes life more enjoyable.) They just cost shift differently.
>That's true only if they let their insurance lapse. As long as they don't do that, they can stay with their current, switch, etc, all without waiting periods or a significant premium relative to "well people". (It's been that way for years.)
On individual and even small group (or medium size groups) they up your premiums, often by a lot of you have something big done, possibly beyond the point of payment. So yes, "if you lapse it goes" is true, often the COST of insurance goes up 10x if something happens to you and you don't happen to be able to be kicked out on another technicality.
I don't want to sound like I'm attacking you, but the fact that you were able to start a company without providing health insurance or a salary sufficient to buy it individually is itself a problem. If your employees got sick, it would be spouses' companies or the public that would shoulder the cost.
The drag on entrepreneurialism would significantly heavier if companies and individuals weren't allowed to freeload.
> The drag on entrepreneurialism would significantly heavier if companies and individuals weren't allowed to freeload.
Measuring that difference is actually the methodology the linked study used; their main source of data was looking at the difference between people who had coverage via a spouse and those who didn't, then attempting to control for confounding variables. In effect people with coverage through a spouse serve as a "freeloaders" control group who are assumed not to suffer the health-insurance drag on entrepreneurship (or at least not to fully suffer it).
> "I don't want to sound like I'm attacking you, but the fact that you were able to start a company without providing health insurance or a salary sufficient to buy it individually is itself a problem."
There is a big difference between financial compensation and offering health insurance for entrepreneurs. Startups frequently pay low salaries (ones that may not support the high cost of health insurance) in return for an equity stake that offers the possibility of a high future payout. You cannot similarly defer health care benefits: when cash is tight, you either offer costly benefits at the expense of other priorities or leave your employees without health insurance. This tradeoff is not present if the insurance system isn't employer-based.
Of course this is only part of the explanation for how our system impedes entrepreneurship. One way or another, we're all paying an absurd amount just to keep us (somewhat) healthy.
No one forced the employees of his company to apply. There should not be restrictions on companies like this. I don't even think there should be a minimum wage. If the employees are walking in the door, and asking for a job, then it's their choice whether to take it or not.
When you raise the minimum wage, or require the employer to provide health insurance, you are closing the door on many potential employees and definitely increasing the unemployment rate.
Employees are paid according to their value. If you are making low wages it's either what you're worth, or because you're too stupid to realize you're being exploited.
I for one think people have a right to be either worthless or stupid, and therefore do not think business should be regulated in such a way.
He's not talking about unfairness to the employees in this case, but to third parties who are neither the employer nor the employee. If a company doesn't offer health insurance or a salary sufficient to buy private coverage, then what happens when one of their employees gets seriously ill? Generally they will still receive some care (at least in serious enough cases), so someone has to pay for it. It will be either: 1) a different company, indirectly via their health insurance package, which covers the person in question as a spouse or child; or 2) hospitals or the government, if a patient ends up going to the ER and receiving care they can't pay for.
Exactly. Unless you're going to allow people to die in the waiting room at the ER because they don't have insurance, someone is bearing the cost of treating the uninsured. It's either a spouse, the government, or everyone else who has insurance via higher premiums.
Generally, that cost is much higher. US hospitals can only treat uninsured people who are on death's door, which is ridiculously expensive. Treating people before they need emergency treatment is much cheaper. Or you could be really hard-line, and just let them die if they can't pay for treatment.
Reality, you already have socialised care. It's just really inefficient. And you pay extra for private cover!
US hospitals can only treat uninsured people who are on death's door
I don't know that to be true, here in Florida we have a lot of immigration, many of them are fleeing worse places and don't have a lot of money and definitely don't have insurance, so they go to the ER like others go to their general practitioner. They do this because hospitals are not allowed to refuse treatment to the uninsured.
> Employees are paid according to their value. If you are making low wages it's either what you're worth, or because you're too stupid to realize you're being exploited.
Somebody ought to tell that to Goldman Sachs or just about any big american corporation which pays insane amounts to people who have a track record of running businesses into the ground.
You seem to have taken as a given the idea that companies, like parents to children, or medieval lords to their vassals, should bear responsibility for their employees' health costs. Otherwise, the company is 'freeloading'.
Yet the point of this study seems to be that employer-centric health-arrangements prevent new business formation.
Let's assume new business formation is something we want to maximize. (New businesses are how our culture rapidly searches for new productive arrangements, and countries with lower rates of business-formation tend to stagnate on lots of other things too.)
Then we have to get away from the cultural expectation that the employer is the direct payer/purchaser of health costs.
Whether the responsibility moves to the national government ('single-payer'), or other governmental bodies, or individuals/families, or other civic/voluntary/religious associations is a separate issue. It has to get away from companies, or else we're losing out on business-formation (and job-mobility) that we need.
You're reading too much into my post. Employer-based health insurance is a terrible idea. Single-payer is IMO the only reasonable choice, but employer-based private insurance is just about the worst conceivable option. Unfortunately, it is deeply embedded.
My point was that the only reason the current system hasn't completely killed new business formation is that employees and founders are able to freeload. Freeloading takes a broken system and makes it even more unfair and dysfunctional.
Fair enough; with your clarification I can see what you meant.
Still, what you call 'freeloading' I see as local approximations of a more-logical system, where someone else – anyone else – pays rather than companies directly. Since it allows a necessary good thing – business formation – to happen, it looks like a step in a fairer/more-functional direction to me.
I think you have got it backwards. Why should companies have to provide health insurance for their employees? It makes it inefficient since people are beholden to their jobs and can't easily change jobs (or start new companies).
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.