
What Startups Need to Know about Obamacare - vivekajayshah
http://blog.simplyinsured.com/what-startups-need-to-know-about-obamacare/
======
nkoren
Good grief. I'm from California, and in the past couple of years I've started
a couple of companies. We've been successful and now have a handful of full-
time employees in addition to the usual assortment of contractors. Reading
through this material -- and seeing the level cost and complexity required to
sort out one's healthcare situation -- makes me incredibly glad that I
emigrated to London to do it.

I'm reasonably sure that Obamacare is in fact an improvement upon the status
quo, but it's still an absurd level of overhead to inflict upon either
individuals or businesses. It's clearly in society's interests to have a
healthy populace. Everybody benefits when the "are you covered?" checklist
looks like this:

1.) Are you a human being? [ ] No -- Sorry! [ ] Yes -- Great, you're covered.

And the premium/co-pay policy looks like this:

2.) Can you walk out of here under your own power? [ ] No -- Stick around and
we'll see what we can do. [ ] Yes -- Excellent; now put away your wallet and
scram.

Honestly the NHS has its problems, but it's saved my life at least once, and
made my businesses far easier to get off the ground, and I'd never again live
in a country that doesn't have something like it.

~~~
chamblin
> 1.) Are you a human being? [ ] No -- Sorry! [ ] Yes -- Great, you're
> covered.

Is this actually true? Does the NHS (or any so-called universal government
healthcare programs) really cover literally any human?

~~~
SEMW
Full details of who's covered:
[http://www.adviceguide.org.uk/england/healthcare_e/healthcar...](http://www.adviceguide.org.uk/england/healthcare_e/healthcare_help_with_health_costs_e/nhs_charges_for_people_from_abroad.htm)

TLDR: all ordinary UK residents, non-ordinary-residents who've been living
legally in the UK for >12 months, EU citizens with EHIC cards, and various
other sets of people.

Treatment at A&E (accident & emergency), family planning & HIV tests, and for
certain communicable diseases is always free no matter who you are, for
practical reasons (no time to ask who you are in A&E before they treat you, no
requirement to ask who you are for family planning & HIV tests for
confidentiality reasons, and for communicable diseases you want to minimise
their spreading).

------
JonFish85
I'm curious to see how this affects the startup community, especially since
I'd imagine cost-wise, this affects the startup community disproportionately
(20-40 year olds who fall into the "In many states, premiums are expected to
increase by 15-50% for people under 40 years of age" category). Either
salaries will have to rise to compensate for that, or startups will have to
pay for those higher costs themselves.

~~~
xnickp
Startups and companies with younger employees will (should) early renew in
December of this year, extending their current coverage til late 2013,
avoiding the price increases in the short term. For the long term, partnering
with a good broker and making sure you're on the right insurance plan can
wring out some savings to make up for the increases.

~~~
eli
Yup, I think that's what we're doing.

I find it strange, though, that the insurance companies are allowing us to
renew early and lock in a rate for another year if they're so sure rates would
otherwise skyrocket in January.

~~~
dangrossman
You have a low rate in the first place because they've decided there's a low
chance they'll have to pay out a lot of money for you. Most likely, your
premium is all or nearly all profit.

Better to keep your profitable premiums than to lose you to a cheaper state
exchange. It'd only make sense to force you into the newer rate immediately if
you had no other option -- but the exchanges are all about giving you more
options.

~~~
JonFish85
It'll be interesting to see how this plays out. I imagine that a big
percentage (maybe majority / plurality) of people jumping into the insurance
markets are going to be people who otherwise couldn't get insurance (pre-
existing conditions, whatever--high-cost clients, essentially). The only way
to balance the books is to make the healthy people pay more. I expect the
young-and-healthy category to pay even more than the 15-50% extra in the
article. It's going to be ugly, from a dollar perspective.

~~~
dangrossman
About 17% of the US workforce is officially "underemployed"; that's a very
large number. I would think a large chunk of that are young, healthy people
who work one or more part-time jobs without benefits. They're to be forced
into the health insurance marketplace as well, with government assistance if
they can't afford it -- essentially, there will be a tax dollar transfer to
insurers that could absorb much of the extra cost of also insuring people with
pre-existing conditions. It really is hard to predict how it will play out.

------
guelo
This felt more like marketing material than objective information for
startups.

~~~
anigbrowl
It is (SimplyInsured is an insurance broker) but the objective information is
short, accurate, and to the point. Discussion of the changes in health
insurance markets from the ACA has been sidelined by the crisis in Syria, so
some timely information is good to have even if it's from a commercial source.

------
joshontheweb
I hate the fact that I am being forced to do business with companies I don't
trust (insurance companies) or face being penalized with fines.

~~~
jbooth
Unless you have enough liquid cash to self-insure against high medical costs,
then you're just hating the fact that you can't freeload on the rest of us who
pay for insurance.

~~~
fennecfoxen
That would be a fairer dig if:

* he were free to actually purchase catastrophic health care coverage instead of the bureaucratic "minimum" politically-acceptable coverage

* he was free to pay for said insurance at a rate approximating his actual risk, i.e. he's actually buying insurance, not something that's insurance plus a government-mandated wealth-transfer mechanism from the young and healthy to the elderly and infirm

But even so, who's to say that people shouldn't be allowed to take risks with
their own life and limb? Meh.

~~~
emperorcezar
> But even so, who's to say that people shouldn't be allowed to take risks
> with their own life and limb? Meh.

That would be fair if he signed a waiver that stated he denied any care if
they drop him off in the emergency room. If he's in an accident and
unconscious, they are going to take him to the hospital where he'll be
treating insurance or not. Without insurance that cost will more likely than
not just be spread around.

~~~
joshontheweb
Just because I don't have insurance doesn't mean I can't/won't pay for
emergency care.

~~~
emperorcezar
Then the government should require you to post a bond for a reasonable amount
to cover that eventuality. I don't think most people have over 100k sitting
around.

Many young people think it isn't a big deal, they'll just pay if something
happens. Except when it does and now they owe over 100k in bills. Oh, and at
the same time they are sick or injured. Now they can't pay, so everyone else
does.

Just because _you_ can or can't do something doesn't mean that on aggregate
people can or can't. Society must use the situation as a whole. On the whole,
many people can't pay and the costs have increased for everyone else.

------
mattzito
Also, something I don't see people talk about as much as they should (perhaps
because startups are staying smaller these days), but if you have 8-10
employees or more _you should be looking at a PEO_.

We used Insperity/Administaff, and our healthcare rates went down by 30% and
the coverage got dramatically better. Plus, they added all these adjunct
benefits that big companies typically offer that few people use, but don't
hurt to offer your team - free legal advice, adoption assistance, cheap LTD
and life insurance (and a free life insurance policy for everyone), and so on.

They were organizationally harder to deal with than our previous payroll
provider, but it was one of the better backoffice decisions we made period.

~~~
basp
Having analyzed Trinet plans against readily available group plans, I don't
think PEOs are necessarily better in terms of health insurance, though that
probably depends on how good your broker is.

~~~
mattzito
I wouldn't be surprised if location, coverage type, etc. mattered quite a bit,
and it's possible that in the last few years it's become less appealing.

But I remember having a conversation with a friend-of-a-friend who worked as a
health insurance advisor or broker (don't remember which) told me quietly that
up to around 250 people, you can generally get much better rates from a PEO
than from the provider directly (assuming you negotiate hard), and that she
thought more companies should be using PEOs. She also felt that the reasons
more companies didn't was having to basically turn over the whole benefits and
payroll function to a third-party, and the loss of control therein.

So - again, I'm sure there's variability, and you should look at all your
options, but I think PEOs are something that startups should be considering in
the mix.

~~~
sahopson
One thing to consider is that even with the lower rates you can get from a
PEO, you're paying a setup fee and a monthly administration fee that, for a
company of 8-10 people, may not make the lower insurance rates worth it.

Startups innovating in the space like ours, Maxwell Health
([http://www.maxwellhealth.com](http://www.maxwellhealth.com)), are able to
offer way better tech and valuable services for startups and do all of it for
free. We've been able to save money for companies who were currently using
your typical PEO.

------
qdog
Not mentioned: You might now be able to hire a much wider variety of people
who couldn't come work for you before because of healthcare worries.

~~~
vivekajayshah
That is a really great point. We wanted to make it - but were trying to find a
data-backed way of showing it.

Do you know of any studies/reports that show offering healthcare - results in
lower hiring costs, more applicants, more qualified people, etc?

~~~
sahopson
Aflac's most recent WorkForces report (we blogged about some key findings a
few months ago: [http://blog.maxwellhealth.com/post/52789613016/what-do-
emplo...](http://blog.maxwellhealth.com/post/52789613016/what-do-employees-
want-unraveling-the-latest-data-on)) has some good data on this.

------
old-gregg

      > Will my rates go up?
      > Yes! (~40% increase)
    

What?! What was the point then? The cost of healthcare in US was _already_
5-6x of a typical EU nation, and we're looking at _additional_ 30% increase?

WTF!

How do we stop this forced re-distribution of wealth from the general public
to healthcare workers and (via government-backed loans) to Wall Street?

~~~
akgerber
The point (or at least one of the points) is that you cannot be permanently
trapped without insurance, and thus essentially unable to access the American
healthcare system, if you acquire an expensive pre-existing condition, which
many people do as they age from being young, healthy people to older,
unhealthy people.

Moreover, your premiums may go up, but if your income is low, those premiums
will be subsidized.

Merely banning health plans from excluding those with pre-existing conditions
doesn't work, as you may know if you've ever had the displeasure of purchasing
insurance on the individual market in New York State.

Another 'point' of the law is to decrease the rate of increase of healthcare
costs, and preliminary indicators are good:
[http://www.kaiserhealthnews.org/daily-
reports/2013/july/30/h...](http://www.kaiserhealthnews.org/daily-
reports/2013/july/30/health-care-costs.aspx)

There are very few young, healthy, high-income people in the United States
buying health insurance on the individual market, and, quite frankly, they're
able to take care of themselves.

~~~
old-gregg
Thanks for the link, very interesting. But I fail to see how will this help us
reduce the healthcare costs by _several factors_? (where they should be)

"Slowing cost increases" is fantastic but it's too late: the costs are already
at 500% of normal and I just don't see how will this be fixed.

An example: a 3-hour stay at the hospital (wrist surgery) was billed to me at
$44K which is what insurance company actually paid. It included a few hundred
dollars for a can of apple juice.

~~~
akgerber
I am willing to bet your health insurance did not actually pay $44K, but
rather the rate they had previously negotiated with an in-network providers
for the services rendered.

The high cost of healthcare stems from many systemic factors, all of which are
pretty thoroughly screwed up. Tearing the system down and replacing it with
something entirely new (perhaps a single-payer system, or a system with
single-payer basic insurance) would be a great idea, but reorganizing an
industry representing 17.9% of GDP[0] of one of the world's largest economies
is a nontrivial undertaking, especially with one of the two major political
parties dedicated to preserving the status quo by any means available.

[0][https://en.wikipedia.org/wiki/Health_care_in_the_United_Stat...](https://en.wikipedia.org/wiki/Health_care_in_the_United_States)

------
eksith
When I visited that page, Avast gave me a malicious download warning:

hxxp://fekhdkxtnosb.rr.nu/jquery/get.php

Apparently what's loading isn't jQuery?

------
pyrocat
I like how this article assumes all startups are in California.

~~~
vivekajayshah
We don't assume all startups are in California, we just have the best dataset
for CA (since that is where we operate). We look forward to showing analyses
like this for other states as information becomes available.

For example - this is a great analysis by Forbes (which we linked to)
[http://www.forbes.com/special-report/2013/what-will-
obamacar...](http://www.forbes.com/special-report/2013/what-will-obamacare-
cost-you-map.html) that goes state by state.

~~~
muzz
A more reputable data source is here:

[http://kaiserfamilyfoundation.files.wordpress.com/2013/09/ea...](http://kaiserfamilyfoundation.files.wordpress.com/2013/09/early-
look-at-premiums-and-participation-in-marketplaces.pdf)

------
ck2
Apparently every adult in the US now has to spend $4 extra a day on
healthcare.

There wasn't $4 per person of waste in the system?

~~~
humanrebar
Alternate hypotheses: 1\. There's more waste in the system now. 2\. The money
is paying for people that weren't being treated before. 3\. The money is
paying for risk that wasn't being assumed before

------
tocomment
Do the bronze plans qualify as "high deductible" plans and let customers use a
health savings account?

------
chris11
This does make me curious how much the government subsidizes some of their
health care plans. I'm on Tricare Young Adult right now, and switching over to
an equivalent health plan would probably double my monthly premiums and add at
least $6,000 in deductibles.

------
basp
For a young, healthy person, is there any reason to spend beyond the basic
"bronze" plan?

~~~
ctdonath
I was young & healthy.

Then a doc wanted to put a pacemaker in me the next day. He was wondering why
I was still alive.

The infected gall bladder and aortic flutter came with no warning too.

~~~
eli
I personally agree with the sentiment and I've never regretted having too much
insurance.

But in this case wouldn't that scenario likely hit the same out-of-pocket
limit that's on the bronze, silver, or gold plans? Or do I not understand how
that works?

~~~
ctdonath
Why is out-of-pocket even a concern? Health insurance should cover unlikely
catastrophic issues costing 5-8 digits, leaving generally "young & healthy"
patients to absorb lesser costs in exchange for practically no maintenance
costs.

If the bronze/silver/gold plans cover the petty stuff (routine checkups) but
hit the wall on something as moderate as a pacemaker (as contrasted with, say,
open-heart surgery or cancer chemotherapy), then the plans are royally screwed
up. Don't go implementing a health care plan just to find out what's in it.

~~~
eli
I'm confused. How do they "hit the wall" if you won't have to pay more than
the out-of-pocket limit of $6350 per year but they still have to cover you? Do
I not understand what that number means?

------
muzz
The graphic they used shows the Bronze plan is $122 per employee per month.

That's far, far cheaper that I had been lead to believe, from some of the
articles written about the subject.

------
spindritf
I get prompted for username/pass.

> Enter username and password for [http://www.kff.org](http://www.kff.org)

------
nsxwolf
Seems to make no mention of spouses and children.

~~~
vivekajayshah
Family plans are literally 2x individual plans - the maximum, deductible, and
other limits are just doubled for the family.

For your spouse - you can identify her rate by entering her in as an
individual (her quote is her rate).

Currently - our quoting tool: [http://www.simplyinsured.com/small-group/first-
quote](http://www.simplyinsured.com/small-group/first-quote) will also let you
see the prices for spouses & children on current small group health insurance
plans.

~~~
bashinator
~50% of spouses are not female.

