
Obamacare could help fuel a tech start-up boom - aaronjg
http://www.computerworld.com/s/article/9242833/Obamacare_could_help_fuel_a_tech_start_up_boom
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nugget
Obamacare is NOT about health insurance. It's about catastrophic injury
insurance, which you are very, very unlikely to ever need. In the past, in the
event of catastrophic injury, you declared bankruptcy and the hospital ate the
bill. Now, in theory, some insurance plan will be on the hook for those costs.

Because of the way co-pays and deductibles work, you have to be in the top 10%
or maybe 15% of health care spenders before you even break even with what
you've paid in on a Bronze plan (by far the most popular self-purchased plan).
Catastrophic injury type health insurance has been available for awhile, at
reasonable rates, unless you had a serious pre-existing condition. So there's
not much new here except for improved access for the chronically ill (or their
breadwinners), who seem unlikely to be prime candidates for entrepreneurship.

It's incredible how much disinformation there is around ACA fueled by
political agendas on both sides, and how little most consumers understand of
the law's actual impact on the health care and employment markets.

~~~
pzxc
I wish it was about catastrophic injury insurance. I'm a single, healthy
33-year-old guy with no kids, so it'd be perfect for me. My annual healthcare
expenditures are virtually zero, year after year, right now. Coverage in case
of a heart attack or cancer would be awesome, because I can't afford a
$100,000+ hospital bill, but otherwise I rarely even have a cold or the flu.

I live in California which, as the first state to comply with ACA, has numbers
available for me up at coveredca.com.

The bronze plan requires me to pay a 30% deductible for the category of "High
cost and infrequent care". So if I get cancer, my $200k bill (just to start,
cancer treatment can go on and on) is still a $60k bill. I'm still bankrupt.

The Silver 87 plan also has a percentage-based deductible. Have to go up to
the normal Silver plan to have a flat rate. For my age it'll cost over $200 a
month if I make $30k/yr or more.

Also, all the plans, whether bronze silver platinum or anything else, include
MANY MANY things other than "catastrophic injury coverage". Everything from
prescription medication to preventative care visits.

I really really want a "catastrophic injury only coverage" option but I don't
have it. That's what insurance SHOULD be, to cover you in case of significant
financial loss. Imagine how expensive car insurance would be if it covered oil
changes, or homeowner's insurance would be if it covered minor repairs?

For someone that's lamenting the "disinformation around ACA", I really don't
think you've checked the actual costs/plans involved. Well, I have, and let's
not pretend that Obamacare offers plain and simple catastrophic coverage
because it doesn't. Look at the website and see for yourself. That's
California only of course but I doubt the other states will be able to do much
better.

~~~
_delirium
_So if I get cancer, my $200k bill (just to start, cancer treatment can go on
and on) is still a $60k bill. I 'm still bankrupt._

The plans all have maximum annual out-of-pocket expense caps, above which you
get 100% coverage, so it wouldn't be nearly as high as $60k. Checking the
website, the out-of-pocket expense for the California Bronze plan is limited
to $6,350/yr for an individual, or $12,700/yr for a family. This is precisely
so that you can have a finite exposure that can be self-insured by keeping
savings in an account.

So in your example, if you were on a family plan and hospitalized, you'd pay
the first $5,000 entirely out of pocket (the Bronze-plan deductible). Then
you'd pay 30% of the next ~$25,650 in expenses (~$7700), which would bring
your out-of-pocket expenses for the year up to $12,700. At that point you've
hit your out-of-pocket cap, so if there are still bills past $30,650, the plan
would cover the entirety of the remainder.

The Bronze plan is essentially a high-deductible plan, but with the partial-
coverage in between zone: you pay everything below $5,000, and nothing above
$6,350/$12,700. The minor exception is that you get one deductible-free
preventative-care visit per year.

~~~
waps
How is that not a blank check to the medical industry ? I mean if this is
true, it seems like it'd be trivial for the medical industry to exploit this
loophole.

~~~
dragonwriter
> How is that not a blank check to the medical industry ?

For one thing, because 100% coverage for medically-necessary care doesn't mean
that everything that the provider would like to get paid for is medically
necessary, and insurance companies are very enthusiastic (to say the least)
about pursuing and denying and even clawing-back-payments-after-the-fact for
_unnecessary_ charges, even when they are only on the hook for some portion
less than 100%; with 100% coverage, they are 100% motivated.

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smsm42
This article seems to make a lot of jumps that I'm not sure I follow. E.g. it
says "anywhere from 19% to 50% of non-elderly Americans have some type of pre-
existing condition". 29% to 50% is pretty wide range, but what "some type"
means? Is it a cold? Is it a case of acne? Is it cancer? Is it debilitating
chronic disease costing hundreds of thousands to manage? Is it a trifle that
no insurer would care about? No idea. This phrase is completely useless for me
if I wanted to estimate if a lot of Americans would be denied coverage due to
pre-existing condition or not.

>>> The average age of people who create a tech start-up is 39, and not
20-something

This may be true, but how many of these people can not afford any health
insurance? I know a lot of startups created by millionaires, but also a bunch
created by penniless students or completely middle-class people. In what
proportion are they among startup founders? Again, if I wanted to evaluate how
many startup founders benefit from ACA, I can not do it based on the article.

>>> There is a big difference between mortgaging your house on something you
can control, and risking going bankrupt by an illness because of something you
can't control,

This does not sound convincing - most startups depend on thousands of factors
they can not control - from Google releasing competing product a week before
their launch to sudden storm in East Asia taking out one of the vital
suppliers to fashion change driving clients to or from particular product.
Presenting it as if startup founders control everything besides their
healthcare costs sounds very non-convincing.

Unfortunately, this article makes a claim that is not properly supported by
the data in it and can not be evaluated by the reader due to low relevancy of
data provided.

~~~
waps
I'd say the most common pre-existing condition is being a heavy (ex-)smoker.

~~~
smsm42
Being a smoker is not a disease, AFAIK. But again, HIPAA Title I as far as I
know provides for uninterrupted coverage regardless of health conditions,
doesn't it?

~~~
waps
That's probably why they call it a "pre-existing condition", not a disease.

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pfisch
I was under the impression this would increase the cost of insurance for
younger people in order to allow insurance to better cover older people and
those with pre-existing conditions....

~~~
MaysonL
It might do that, but so what? A slight increase in fixed costs, with a
massive decrease in variance will decreases the risk of medical bankruptcy
considerably, even for the young.

You seem to be under the impression that all potential entrepreners are young,
without dependents, and without pre-existing medical conditions. Not true.

~~~
ghaff
Note also that (as I understand it), if someone already has insurance they can
maintain it through HIPAA. The main difference in that case from the new law
is that they can't let their insurance lapse or there is no obligation for the
insurance company to renew it.

~~~
dantheman
Lots of insurance plans people had are being cancelled since they don't
provide coverage mandated by ACA.

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muzz
From a previous article in the Wall Street Journal [1]:

"The Kauffman-RAND Institute for Entrepreneurship Public Policy in Santa
Monica, Calif., says the law could increase the number of new U.S. businesses
by as much as 33% over several years"

[1]
[http://online.wsj.com/article/SB1000142412788732405970457847...](http://online.wsj.com/article/SB10001424127887324059704578471122746420826.html)

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ck2
If only it was health care cost reform instead of insurance reform.

I simply do not understand how the 80% of insurance costs being spent or
refunded is going to be true.

If you pay $5000 a year for insurance and you go for one checkup that year -
are they going to give you $4000 back?

Somehow I suspect not. And I doubt it covers dental.

Everyone is quick to point out you won't lose your insurance for this or that
- but can't they just raise the rate to the point where you miss a payment?
Last time I checked your car insurance or life insurance is quick to drop you
when you miss a payment or two.

And just like student loans, I suspect costs are going to rise to the point of
your maximum insurance coverage.

~~~
yardie
No, they don't give you back $4000. They get $5000 from 1 million members and
have to justify spending $4 billion. That savings gets passed back to you as a
lower rate the following year. The point of 80%, I believe, is to drive the
"for profits" out of the industry. With only a 20% margin, once you factor in
the overhead, they are going to have to be aggressively lean.

This is the end run around price controls, call it profit controls.

~~~
rdl
It's profit controls for _insurers_ , not for providers, though. It doesn't
particularly control delivered costs, except very indirectly (due to the lag
between premiums and expenditures).

If provider prices go up, insurers can raise their premiums and still stay at
80%.

~~~
yardie
They have also liberalized the insurer market, so instead of 1-3 insurers per
state you can choose one from CA, NY, or TN. If you get insurance through work
it is up to HR to find the best rate. If you go alone you can use the
exchanges.

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gavanwoolery
I am almost 32 years old and pay $120/month for insurance with Kaiser (I have
been very happy with them, and even had surgery done under Kaiser). I don't
think this is necessarily a huge expense in the startup world, where people
often spend this much on cable tv, cell phone plans, etc. I would guess a fair
amount of people interested in entering the startup space are younger and
healthier than I am. I am a little bit dubious that such a health care system
would cause a startup boom - in fact, if you look at other countries with
similar health care policies, they have far fewer startups per capita. This is
not to say its a bad idea (you be the judge of that) - just that I don't think
it will instill dramatic change in the startup scene.

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replicatorblog
It's an interesting idea, but this post provides an interesting contrast:
[http://www.thedailybeast.com/articles/2013/06/05/obamacare-j...](http://www.thedailybeast.com/articles/2013/06/05/obamacare-
job-killer-or-entrepreneurial-turbocharger.html)

Basically, if insurance coverage is really creating "Job Lock" then the
potential entrepreneurs will also likely be locked in by salary needs to.

~~~
jsfy
While concerns over an interruption in salary are certainly legitimate, just
uncoupling health insurance from employment will decrease the barrier to
switching jobs and increase mobility.

It's worth noting that the "job lock" that you're referring to is a rather
recent phenomenon. Employer-sponsored health insurance was essentially an
accident of WWII wage and price controls (source:
[http://www.nber.org/bah/2009no2/w14839.html](http://www.nber.org/bah/2009no2/w14839.html)).
Because health benefits were exempt from WWII-era wage controls, employers
used them to attract employees. Furthermore, because the employer contribution
is paid in pre-tax dollars (i.e., employer-sponsored health insurance is
effectively subsidized by the government), it became an attractive way to
provide greater overall compensation to employees than otherwise possible.

However, the issue of coupling employment to insurance was quickly apparent,
which is why we have COBRA (since 1985), but even that is more of a patch than
a fix. Regardless of the merits or demerits of Obamacare, uncoupling
employment from insurance is (theoretically) a positive outcome for everyone,
whether one is an entrepreneur or not. We're already seeing firms shift their
cheapest plans to exchanges
([http://online.wsj.com/article/SB1000142405270230479580457909...](http://online.wsj.com/article/SB10001424052702304795804579097422592424860.html)).
Increasing health insurance portability should make jobs less "sticky" and
result in a more efficient distribution of labor.

~~~
einhverfr
Indeed. BTW, I think Obamacare has largely been an exercise for how to take a
broken system and "fix it" if by "fix it" one means stack everything against
the individual and for big pharma/medical device manufacturers.

The problem is we have used health insurance to chain people to jobs for a
long time now, and the result is that it is very hard to be self-employed in
the US (much harder than in any other country in the world). This needs to be
decoupled whether it is "buy your own insurance," or whether it is something
like Canada's province-by-province single payer approach.

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gpjt
Hmm. If this is true, then why do there seem to be more (and more successful)
tech start-ups in the US under the pre-Obamacare system than there are in,
say, the UK, where almost all healthcare is covered by taxes and is free or
nearly free at the point of use?

I guess it's not implausible that there's a separate factor that makes the US
a better place to do a startup, and the current healthcare situation counts
against that factor. But still.

~~~
dragonwriter
> If this is true, then why do there seem to be more (and more successful)
> tech start-ups in the US under the pre-Obamacare system than there are in,
> say, the UK

There's pretty much more of everything in the US (except maybe castles and
titled nobility) than there is in the UK.

~40 times the land area and ~5 times the population has that effect.

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collyw
That headline reminds me of how the iPhone 5 was going to save the US economy.

