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Is employer-based health insurance a barrier to entrepreneurship?

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Re: Is employer-based health insurance a barrier to entrepreneurship?

#51

Post by Loic »

For information, here in Germany, from where I run my startup which itself is a UK Limited, I provide my employees with full health insurance (teeth, sick days, everything), pension, unemployment insurance, etc. for basically €700/month for an after tax salary of about €2500/month.

As soon as you start to factor in all the costs of insurance, etc., doing business in the old Europe is pretty cheap. Even in Denmark, where I lived and worked for a while, you get everything included from the state and as a startup founder, this is really great.

I believe in free market for a lot of things, but not for health insurance.

Re: Is employer-based health insurance a barrier to entrepreneurship?

#52

Post by dotBen »

jonknee wrote: post #16
bradly wrote: post #12

Earlier quoted context omitted.

Health insurance premiums are tax deductible.

Not if you have an employer. The deduction is for self employed people.

which begs the question, if your company is so small that you can't offer health insurance, 401(k), etc then what is the point of having your employees salaried.

You might as well have them as contractors so they can enjoy the maximum tax write offs (health insurance, %age of their home as office, all hardware and software, %age of electricity, internet, etc).

Re: Is employer-based health insurance a barrier to entrepreneurship?

#53

Post by dotBen »

groaner wrote: post #10

This grumbling keeps coming up here, so I just have to ask: how feasible is it for a young American like me to just pick up and leave for a place that does have a sane health care system, and work on whatever I want? As far as I can tell, these places tend to have fairly steep immigration/visa hurdles to overcome, usually involving some kind of employer sponsorship (presumably to deter freeloaders?). If anyone here h…

I moved from the UK to SF because of startup culture.

I hate the health care system here, would love to be under the UK National Health Care system instead, but overall would rather be living in SF than UK.

I suck up the $200/month health insurance (I'm a healthy 29 year old). If I had kids it would be a different story, mind you.

Re: Is employer-based health insurance a barrier to entrepreneurship?

#54

Post by lawnchair_larry »

jonknee wrote: post #41
hugh4life wrote: post #36

Earlier quoted context omitted.

I'm kind of fond of Singapore's health care system... http://econlog.econlib.org/archives/2008/01/singapores_heal.... http://blog.jparsons.net/2009/08/why-singapores-health-care-...

Me too, but it's government run... Seems like your previous statement would preclude you from liking it.

Some governments are good at running some things. The US government seems to screw up everything. I don't know why this is, but if public health care ever becomes reality, and it is anything like the DMV, or any government services in California for that matter, or VA hospitals...may [deity] help us all.

I am in no way a fan of the perverse incentives created by a for-profit private health care system, but I am worried that the alternative might be even worse.

Re: Is employer-based health insurance a barrier to entrepreneurship?

#55

Post by gojomo »

gamble wrote: post #24
enjo wrote: post #6

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 d…

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.

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.

Re: Is employer-based health insurance a barrier to entrepreneurship?

#56

Post by dnautics »

Loic wrote: post #51

For information, here in Germany, from where I run my startup which itself is a UK Limited, I provide my employees with full health insurance (teeth, sick days, everything), pension, unemployment insurance, etc. for basically €700/month for an after tax salary of about €2500/month. As soon as you start to factor in all the costs of insurance, etc., doing business in the old Europe is pretty cheap. Even in Denmark, wh…

Why don't you believe in a free market for health insurance? Forcing people to pay into a health insurance is kind of scammy - let's say that I have a genetic condition that is certain to kill me rapidly at age 30. I want to live my life to the fullest, and I'd rather not be forced to buy health insurance that protects me from things like adult onset diabetes, alzheimer's, cancer, parkinson's, etc, that I'm just not going to get. Why should I be forced to pony up for other people's healthcare, too? What do I owe those bastards who get to live twice as long as I am and beat me up and teased me on the playground in middle school?

The more insidious thing about universal healthcare is that it really screws over most minorities. Minorities tend to have diseases that are not as well researched as those found in ethnic majorities (or certain minorities which are disproportionately represented in the medical research community). Moreover, drug testing -for safety and efficacy- in minorities is very scant, and it is sometimes the case that adverse reactions to drugs occur in minorities that do not occur in the ethnic or racial majorities. Of course to find that out you need statistically relevant sample sizes, and the way drug safety testing is done is by recruiting on college campuses - you can see the potential problem here - and even still some minorities that are overrepresented on colleges are, for whatever reason, underrepresented in testing pools. So as a minority, one might be paying into a system that disproportionately treats diseases that one would not be getting, or with different pathologies, and for which the treatments may be completely ineffective or even dangerous due to lack of study.

Then there is this problem. What if those who decide health coverage decide that heterozygous genetic condition X is covered (and it's expensive). Two parents who are carriers now can decide, hey we can afford to have kids - after all it's their right. So now everyone is saddled with the burden of their selfish choice. Or, we can restrict their liberty by prohibiting all such pairs of parents from reproducing. Whereas if they are responsible for the cost of their children's care, then the simple answer is they might think twice about having children and if they are foolhardy enough to, there is a 1 in 4 chance they get dinged with the cost of coverage.

Ultimately, any governmental (i.e. non-free-market) health insurance plan must either explicitly discriminate between individuals or, if universal, implicitly discriminate between individuals. The perverted consequence is, ultimately, going to be a transfer of wealth from the poor (via inflation) to those who have the right genetic predisposition to conditions which are decided to be covered by the powers that be.

Keep in mind that 'free market' != 'for-profit'. You can have nonprofit insurance companies, and healthcare charities, in a 'free market' system. What free market means is that the consumer has a choice of where to go for their services. If you are saying that you don't like 'free market healthcare' you are saying that in the aggregate, the population is too stupid to make responsible, cost-effective decisions about their own health. If that is the case, who or what group of people could possibly be so enlightened and all-knowing to correctly orchestrate all those choices from the full society on down to the individual level? And how might we shield society from the hubris of our godlike health chancellor/council?

Re: Is employer-based health insurance a barrier to entrepreneurship?

#57

Post by gamble »

gojomo wrote: post #55
gamble wrote: post #24

Earlier quoted context omitted.

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.

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 busines…

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.

Re: Is employer-based health insurance a barrier to entrepreneurship?

#59

Post by Experimentalist »

lawnchair_larry wrote: post #54
jonknee wrote: post #41

Earlier quoted context omitted.

Me too, but it's government run... Seems like your previous statement would preclude you from liking it.

Some governments are good at running some things. The US government seems to screw up everything. I don't know why this is, but if public health care ever becomes reality, and it is anything like the DMV, or any government services in California for that matter, or VA hospitals...may [deity] help us all. I am in no way a fan of the perverse incentives created by a for-profit private health care system, but I am worri…

What wrong with a for-profit system? There should be MORE profit, not less.

High profits attract entrepreneurs to compete for customers by offering lower prices and innovating - consumers benefit.

The current system is the exact opposite - there is relatively little and uncertain profit (and high barriers to entry) in insurance and hospitals, and a ton of government interference and regulation. Few entrepreneurs want to get involved, which reduces competition and innovation and keeps prices higher.

"Plunging revenues from investments have forced median profit margins for U.S. hospitals to zero, according to a Thomson Reuters analysis of hospital finances published on Monday.

And half of the more than 400 hospitals studied are losing money, the analysis found."

http://www.reuters.com/article/2009/03/02/us-hospitals-usa-i...

Re: Is employer-based health insurance a barrier to entrepreneurship?

#60

Post by EiZei »

shirtless_coder wrote: post #39
gamble wrote: post #24

Earlier quoted context omitted.

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.

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 de…

> 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.

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