What Startups Need To Know About Health Insurance in 2013

I don't suggest you model it after Canada's system. It's good, but it could be better.

I moved to Canada from Australia, so I'll compare the two systems for you.

Canada: "healthcare for all" provides basic coverage of everything you need. Works pretty well. Even homeless / out of work people are fully covered. Things like dental and chiropractor are not covered, so you pay for those. Employers give "health care" which really just means they will pay a percentage of your costs for things like dental, chiropractors, prescriptions, etc.

The problem here is that if you want "better than basic" healthcare, it's tied to your employer, which has all the negative impacts of the US system of being stuck to your job. This sucks.

Australia: Same as Canada in that basic coverage covers emergencies and what-not for everyone. Again dental, chiropractors are not covered. BUT if you want "better than basic" care, it's your choice if you want to go out (with your own cash) and buy "private health care" which again will pay a percentage of your out-of-pocket costs for those extras (dental, etc.).

The massive, massive, massive advantage here is that your health is in not directly linked to your job. Your employer has no say or impact on your choice of healthcare provider, or if you even want to buy that extra coverage. As a single, healthy 30 year old, I've never seen the need to pay the extra, but in Canada I'm forced to because my employer says so.

I've been in Canada 7 years, and I actually think I'll go back to Australia, primarily for exactly that reason.

EDIT: OK, sure. In Canada you can also choose to buy your own "extra" health care from your own money. What I think is bad is how employers do it for you, without you having much say in the matter. In this way, Canadians feel their health is connected to their employer (a great example is when you interview for a job in Canada, people ask "what are the benefits like"? - In Australia, that is not a question.)

We need to get rid of the unregulated, manifest "socialist" medical system that the United States has today and replace it with something that is a known quantity. A public system is one option (and one that I'm in favor of), but there could be other solutions too.

In general, the current system doesn't stop people who can't pay from receiving care. If we agree that allowing someone to die because they can't pay isn't acceptable then we need to have some kind of public system. Care is rationed by insurers and providers who make judgement calls that, largely, aren't subject to public scrutiny or regulation. (We have the "death panels" that those opposed to public healthcare railed against, but these "panels" are made up of insurers and providers working in a decentralizd, uncoordianted, and uncontrolled manner.)

What we have is a "shadow socialist" system where those parties who can afford to pay have to carry the slack for everybody who can't. Individuals and employers end up paying higher premiums to insurers. Healthcare providers increase the cost of procedures to cover the write-offs for the uninsured. Insurers negotiate relationships that limit consumer choice or access to procedures that providers aren't willing or able to discount.

It's like the entire mess is designed to be suboptimal for all parties involved. It's depressing that, as a country, we can't have reasonable discourse, agree to compromise, and come up with some kind of substantive strategy.

I have Canadian friends, and although they would do anything to preserve their health care, they complain about how long it takes them to make appointments for specialists, tests, etc. I live in the Bay Area, and I have Kaiser HMO, and I love them. They seem vastly superior to Canadian health care in every respect. Even in cost, my friends in Toronto have to pay $100/month each as a Health Tax.

Case in point, I got an endoscopy scheduled in 9 days. My friend told me that the average wait time in Canada for an endoscopy is 9 months. I had an MRI scheduled within 1 day. My friend's wife, who was suffering from gallstones, waited 4 months for her MRI. I just made an appointment to see a GI specialist, and it took 1 day. My friend who is a pharmacist for Shoppers Drug Mart in Toronto told me she was amazed at how quick that was.

I heard so much about death panels and blah blah blah but I absolutely want to sign a document that says that if keeping me alive is going to cost over x dollars, please pull the plug and save the money.

The x will probably change as I make more money. Right now, two million dollars is probably where I'd balk. (Pretty sad I know but I think the government could put that two million dollars to better use than to keeping me alive.)

I guess a death panel is inevitable. I am pretty sure I will change my mind and chicken out at the last minute and say "I want to live even if it costs ten million to keep me alive". Don't listen to the senile me! Let me die and use the money on what matters -- kids.

I don't have kids and don't plan on having any anytime soon.

1. Oh please, this is just a truism expressing your general political views. Government does lots of things well. Every time there's a relevant accident, the NTSB is on the spot within 24 hours. The FAA does an amazing job. I could go on with many other examples; and where government is slow to respond, it's often because the rules require government to engage in a lengthy public consultation process or make it easy for third parties to litigate against the government (see: any case involving environmental review). It's not like waste, inefficiency, and so on are absent from the private sector.

2. The more your choices impact the lives of others (making yourself chronically ill and sucking up expensive medical resources, driving at 100mph in the rain), the more costs your bad choices impose on other people. Government is the agency we delegate some of our individual autonomy to in order to deal with such systemic problems. The alternative is everyone suing everyone else all the time.

3. I'll tell you the downsides: there are waiting lists for some procedures that are in high demand. There are about as many industrial disputes as before. Everybody blames the government for everything (like a tiny country hospital shutting down, nurses' pay, availability of some experimental treatment of unknown efficacy). A commonly-voiced fear is that if healthcare is cheap then everyone will crowd up doctor's waiting rooms all the time. This doesn't happen, because other than a tiny number of hypochondriacs nobody likes going to the doctor unnecessarily, for the same reason that most people don't engage in recreational dentistry.

The fact is that healthcare can't clear like a normal market for three reasons: a) there are genetic factors that you have no ability to control or predict that can make you sick unexpectedly; b) you typically don't have a choice about when you get sick so you can't defer your healthcare spending accordingly; c) most participants in the market are woefully under-informed because they don't have any kind of medical degree, and price theory demands market transparency for all participants in order for equilibrium to emerge and vendors to be price takers. What we have instead is a monstrously inefficient and unresponsive form of monopolistic competition, in which part of your healthcare costs go towards billboards and TV commercials for goods and services whose efficacy you are incapable of judging properly, massive layers of incomprehensible administration, and heads-I-win-tails-you-lose pricing that royally shafts the individual consumer in insurance and care markets.