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The subtle but crazy part about this is at the bottom when it details the author: "Donna Dubinsky, a co-founder of Palm Computer and Handspring, is the chief executive of a computer software company."

I'm going to go out on a limb and say money is not an issue for Donna, yet she still can't even buy insurance if she wants to. I've always thought healthcare access was a bigger hurdle for entrepreneurs than tax rates. If I make a lot of money with my startup, great, I really could care less if I pay 15% or 40% of that to the gov't, because it will be a whole lot more than I make now. But not having health care insurance (or worse, having crappy insurance that denies you all the time like most individual plans do) is so damn risky it makes me afraid to step out on my own.




I've said it before and I'll say it again - the MA health care law ("RomneyCare", which is functionally very similar to "ObamaCare") is really what let me start a startup - the money wasn't the issue, but the ability to get an individual policy at a reasonable (not at all subsidized, just group-negotiated) rate was.


+1 on mass health care, very reasonable rates and abundance of good options. I was very much against it and actually voted no but came to see the benefits and changed my opinion


Amazing. I just looked over MA's health care info, and it's much more affordable (and covers much more) than the average insurance plan in other states. Congress, THIS is what we need for all of America (or something that's at least that level of coverage for that price...)


The beauty of large groups negotiating!

That said, that's roughly what the ACA ("ObamaCare") will likely end up with, if it doesn't get derailed, except that it'll take a few years to get there because 50 states is more complicated than one.

Actually, it could scale reasonably well, but for political reasons wasn't set up that way. So instead, each state will set up its own exchange; I suspect some will be MA-quality, some will be better, some will be poorer.


Do you have to have lived in MA for a while to be able to get this or do you just need to live there when you apply for medical insurance?


You can do it right away - and in fact, basically have to, since the other part of the puzzle is that you MUST be insured. Ultimately it's not really that clever - the state just acts as a giant group purchaser, and the fact that it's compulsory spreads the risk around so that it's not an adverse selection problem. It seems silly to shill for it, but all the details are (more or less) explained on the site: http://www.mahealthconnector.org

Note that the reason you can apply for it right away, unlike other state "benefits", is that it's not really a benefit - there's no subsidy (at least, not for self- or startup-employed folks like me who very well can afford it), so there's no real cost to the state of letting 1, 2, or 17000 more people buy in (and in fact there's an advantage, because you increase the risk pool).


It looks like you can only enroll between July and august. Man this insurance thing is like the hardest block in becoming an entrepreneur!


Now if I could only buy into it without moving to MA...


Good point, Boston is very high on my list of places to move for the startup scene (I currently live in eastern CT, previously worked in NYC, so I'm closer to Boston than SF.)


I think she could buy insurance if she really wanted.

I've thought about this a lot because I could easily be in this situation. If I did anything on my own I would need a group plan quickly. You only need 2 people to create a group.

So you can buy insurance its expensive, here is how you do it.

1) Start a company.

2) Hire another employee (this costs a lot)

3) Make a group health insurance policy for the company.

There you bought insurance.

I know this is stupid, but I'm just the kind of person that when someone says "You can't do XXX" I automatically have to see if I can do it.


If the insurance company suspects that you've done something like this, they will wait until you need to claim (so they can take in the premiums) and then deny a payout on the basis that you formed a company purely to get round having been denied insurance. Every day, insurance companies look for ways to deny payouts, and they've thought of this one.


In no way did I say make a fake company. You'd have to start a real company to do this.


If you create a completely real company with the driving intention to get yourself health insurance because you can't or won't do it as an individual, it won't matter how real the company is. The insurers will decline to pay out.


It's not the difference between a family and a company, its the size of the group. Thus the costs for a company with 10,000 people is far different than a company with 10.

Also, if you have a group of 2,5,10 or 20, the insurance company has an easier time denying you because if you get pissed and drop them, its not a big loss for them. In contrast, if you deny the right person at a 10,000 person company, they lose a big account.


Actually, has anyone tried banding a group of startups together until they have several thousand employees, then buy insurance as a bloc?

Another idea I've kicked around: Create a sort-of incubator where, on paper, all of the startup founders and employees are employees of the incubator group. Then the incubator can handle the whole mess of both insurance and income taxes. (Bonus: Since the "incubator" now has a ton of developers on tap, it could double as a consulting agency.)


I work for a PEO -- Professional Employer Organization -- and that's essentially what we do. Clients that come onboard with a co-employment contract for their employees. We pay their employees, our clients pay us and we become the employer (in most states though laws are always changing). This means we have 90k employees that help us negotiate some pretty good rates for Benefit plans. It's actually a pretty decent way for a smaller company to offer benefits to their employees that are competitive to larger companies.

We do try to take on companies of a minimum size (10+ employees) but sometimes end up taking on companies with 2 or 3 employees because the owner forecasts explosive growth -- which never happens. All that said, it's a freaking battle with the carriers every year to try to keep the increases at a lower rate. Also, we have "rate buckets" where we place clients according to risk and past medical history of its employees. It still tends to work out better than if they would attempt to get insurance on their own.


> place clients according to risk and past medical history of its employees

shudder This is the part where a small employer can basically be forced to find an excuse to dismiss anyone with a serious illness, who is then doubly screwed. A public option would have been so much more humane.

http://www.dailykos.com/story/2009/7/7/751100/-How-I-lost-my...


Haven't much looked into this (being as it now pertains to me, maybe I should!), but the Freelancers Union was making a bit of news last year[1].

Also, there are HR-outsourcing companies like TriNet that negotiate as a group for smaller/startup companies[2].

1. http://www.freelancersunion.org/

2. http://www.trinet.com/about_us/default.htm


I've been using Freelancers for about a year, paying ~350/month for a decent PPO and dental. Not incredible, but it's the best option I could find apart from high deductible plans. NY only unfortunately, and I'm not aware of any similar things elsewhere.


I'm kinda wondering if YCombinator or one of the other incubators could do something like that. For me, a major reason why I'm not doing a startup now is that I'm not sure I could get health insurance. My last startup was done in Massachusetts when I was 25, so it was no problem to get an individual high-deductible policy. I'm not sure I could do the same thing in California, now that I'm pushing 30.


I'm in the same exact boat at 29. As a result, I'm currently looking for partners who are under 26 and still covered by their parent's health insurance. The last thing I need my precious capital going towards is a booboo. It means I have one less thing to worry about. I've set aside monies just to cover my own.


I've spent some time thinking about different startup ideas / permutations to address exactly this solution. In my research, I've found attempts at both methods you describe above, in various forms and various states, with widely varying degrees of success, but most have ended in failure. The "successes" tend to offer some limited choice in plans, but the rates certainly aren't great and the deductibles are still pretty high -- mostly it's a fallback safety net for serious emergencies.

I think a startup that can help tackle this issue would create tremendous value in the payor / consumer market, but the field is extraordinarly complicated and requires a very rare multi-disciplinary background in individual state law (CA's system alone is very different from, say, MA's bc CA is HMO-based and MA has a public option), behavioral economics, gov't regulation, insurance underwriting methods, insurance administrative practices. Oh, and if it's a tech startup, the team would obviously need web dev / product skills as well.

The problem is, developing a basic mastery of all these subjects takes a lot of time -- reading, thinking, and experiencing to understand the pain points deeply. That tends to cut against the stereotypical startup team of two young twenty-somethings hacking away and living on ramen, who have never studied the insurance industry or directly experienced the pain of searching for or relying heavily on health insurance (bc young 20 somethings tend not to have major health problems). I think that's a key reason why startups haven't done much innovation in the insurance payer market.

My latest line of thinking is about whether there are hacks around the problem that can incrementally chip away at and disintermediate insurance payers as the sole gateway to affordable healthcare.


Sounds like an umbrella company (http://en.wikipedia.org/wiki/Umbrella_company). Almost all contracting in the UK is through umbrella companies or a single member LLC's rather than directly between the employee and employer.


Just employ the employees in your 1-N person startup through TriNet and be done with it.


As a group you have more leverage purchasing pretty much any service. I wonder what it would take to put together a group buy app for health insurance.


> As a group you have more leverage purchasing pretty much any service

although this is true, the leverage gained through group is different for other services, where a bulk order is much cheaper. Assuming everyone's making rational decisions, the only people that would want insurance would be the high risk ones. Insurance companies would loss money regardless of the rates they charge because the only rational people that would pay it would be the ones that think they would likely benefit from it, since they have additional information (eating habit, risk level, etc ) over the insurance company. By putting a lot of people (high risk and low risk) in a group, the insurance company can balance out the group and make a small gain on top of the expected payout.


Even healthy people are made out of meat, which is the ultimate pre-existing condition. Are there really a significant number of people who think it's rational not to seek insurance, as opposed to not having enough income to meet the market price?


You're not considering the value of the "float" that insurance companies get. I.e. they get your money up front, but only have to pay out later. This is a huge advantage.


My auto insurance company (it operates like a cooperative) provides a group plan for members to purchase health insurance. (Coverage is provided by an external company).

My auto insurance company also runs a savings bank for its members and offers loans at markedly better rates than retail banks.

Consumer cooperatives would seem the simplest way to alleviate this issue--no need for additional legislation. To confirm, I live in the US.


What's your auto insurance company?


USAA


A two-person group is not going to fare much better than an individual plan, and I'm not so sure that there are that many companies that accept two-person groups anyway.


Not true in CA anyway, you can have a 2 person company and apply for small employer group coverage. You can't be denied for pre-existing conditions and your rates have to be within 10% of larger group rates.


Yeah I think you'd need to hire about 49 more people before you had a substantial group going.


I work at a company with a 2 person group and it fared much better than an individual plan.


The idea isn't that stupid. You just need to be more than 2 people. Is there any reason why a group of self-employed people can't go together and get insurance as a group? If the group is relatively homogenous and are able to pay the bills, surely the insurance companies would be interested?


+1

If the Republicans are serious about an economic recovery and want startups to flourish, then universal healthcare is a cornerstone of such an effort. I know of other people too who are afraid of leaving their (big-company) positions because they have a wife + young kids, and lack of health insurance terrifies them.


What could possibly have given you the idea that the Republicans want an economic recovery?


Well, eventually. Just not under Obama. Maybe if they wait a few years?


I was also confused about that. I may be misunderstanding how the law works, but isn't it true that group coverage can deny pre-existing conditions only for a limited time (6 months)?

In California you need at least 2 employees to qualify for group coverage. So you start an actual company, perform business (presumably turning in some money to cover your costs), and also get coverage for your dependents. There's one caveat that the coverage does not start until your company has been around for 6 months (unrelated to the pre-existing 6 months figure above.)

Or was the author's post related to (presumably) retiring earlier and specifically not wanting to start a company again?


Well, once her current software company (Numenta) deploys AI maybe she won't need coverage. /joking




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