

Is employer-based health insurance a barrier to entrepreneurship? - akgerber
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V8K-512K1KY-1&_user=10&_coverDate=01/31/2011&_rdoc=1&_fmt=high&_orig=search&_origin=search&_sort=d&_docanchor=&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=ae336445c13e1f5172d6f65d0c420f4d&searchtype=a

======
enjo
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 didn't have
decent insurance I'm not sure my company would exist today.

~~~
gamble
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.

~~~
shirtless_coder
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 definitely
increasing the unemployment rate.

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.

I for one think people have a right to be either worthless or stupid, and
therefore do not think business should be regulated in such a way.

~~~
_delirium
He's not talking about unfairness _to the employees_ in this case, but to
third parties who are neither the employer nor the employee. If a company
doesn't offer health insurance or a salary sufficient to buy private coverage,
then what happens when one of their employees gets seriously ill? Generally
they will still receive some care (at least in serious enough cases), so
someone has to pay for it. It will be either: 1) a different company,
indirectly via their health insurance package, which covers the person in
question as a spouse or child; or 2) hospitals or the government, if a patient
ends up going to the ER and receiving care they can't pay for.

~~~
gamble
Exactly. Unless you're going to allow people to die in the waiting room at the
ER because they don't have insurance, _someone_ is bearing the cost of
treating the uninsured. It's either a spouse, the government, or everyone else
who has insurance via higher premiums.

~~~
wisty
Generally, that cost is much higher. US hospitals can only treat uninsured
people who are on death's door, which is ridiculously expensive. Treating
people _before_ they need emergency treatment is much cheaper. Or you could be
really hard-line, and just let them die if they can't pay for treatment.

Reality, you already have socialised care. It's just really inefficient. And
you pay extra for private cover!

~~~
kls
_US hospitals can only treat uninsured people who are on death's door_

I don't know that to be true, here in Florida we have a lot of immigration,
many of them are fleeing worse places and don't have a lot of money and
definitely don't have insurance, so they go to the ER like others go to their
general practitioner. They do this because hospitals are not allowed to refuse
treatment to the uninsured.

------
sammcd
I remember an episode where this american life explained why health insurance
came to be like it is.

I was specifically interested in the fact that they said during WWII wages
where not allowed to increase, so the only things that employers could
increase were benefits. This was the biggest factor in making Health Insurance
employer-based.

~~~
jonknee
Also having it be a tax write-off. If an employee were to buy it on their own
it would be with after tax dollars and thus much more costly. (That's even
discounting group rate discounts.)

~~~
bradly
Health insurance premiums are tax deductible.

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

~~~
dotBen
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).

~~~
dangrossman
It's not like you can just pick what to call them. An employee is an employee
and a contractor is a contractor. If you want someone to work in your office
9-5 and commit their code changes to your server each day, they're an
employee, and you can't call them a contractor.

~~~
danssig
I think you can actually.

EDIT: What's with the downvotes? Companies _do_ call them a contractor. It
happens every day. They're are special concerns but they can certainly work
9-5, etc.

~~~
detst
The IRS has cracked down on this practice. You can't just call someone a
contractor that meets the conditions to be an employee. You can be mindful of
these conditions and work around them but just calling an employee a
contractor is not good enough. Even intentionally working around the IRS rules
can get you in trouble.

You might get away with it but if you want to make the IRS happy, you better
not call an employee a contractor if you don't want to deal with the fines,
reclassification and back taxes that go with it.

------
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.

~~~
dnautics
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?

~~~
DrJokepu
> Why don't you believe in a free market for health insurance?

There are two main reasons. First of all, as someone mentioned it in another
thread here a few days ago, healthcare does not follow the rules of supply and
demand, since people would pay anything for survival. You're never going to
say that "ah this treatment is a bit overpriced; I think I'll get more value
for my money if I'll just die instead". It's ridiculous. Second, there are
various domains where the short term interests of various parties do not
coincide with the long terms interests of everyone, hence regulation is
needed. This is not political theory, it's game theory, it is nothing to do
with personal opinion. It's a fact.

> Let's say that I have a genetic condition that is certain to kill me rapidly
> at age 30

You probably don't want to die then at 25 after not receiving a treatment
after having car accident.

> Why should I be forced to pony up for other people's healthcare, too?

It's called compassion and it is a cornerstone of our civilization.

> The more insidious thing about universal healthcare is that it really screws
> over most minorities.

I don't know about that. I am not a doctor so I don't know whether such
conditions really exist, but my gut feeling is that almost all of the stuff
people get treated for are universal across various minorities.

> What if those who decide health coverage decide that heterozygous genetic
> condition X is covered...

I think this must be a fundamental, antagonistic difference between our world
views. As a European conservative, I truly believe that no life is
unnecessary, no life is wasted.

> ultimately, going to be a transfer of wealth from the poor (via inflation)
> to those who have the right genetic predisposition to conditions

Most of the things people get treated for have nothing or almost nothing to do
with genetic conditions. There is no gene for suffering a car accident. While
having unlucky genes could decrease the chances of survival, ultimately
everyone can get cancer.

~~~
dnautics
"Most of the things people get treated for have nothing or almost nothing to
do with genetic conditions."

Almost completely incorrect. Got the flu? Well that's because the flu virus
latched onto a receptor that let it get into your respiratory cell. That
receptor could be mutated in you.

Got into a car accident? The surgery is painful. They're going to give you an
anaesthetic. Your response to the anaesthetic is going to be governed by
genetics. The pharamacokinetics - how much anaesthetic you'll need - governed
by genetics. Maybe the current standards of care will kill you.

"While having unlucky genes could decrease the chances of survival, ultimately
everyone can get cancer."

Thanks for making my point for me. Cancer is extremely genetic. Got a mutation
in BRCA? You're going to have an elevated (or possibly reduced) risk of breast
and prostate cancers. And especially, individual cancers' response to drug
treatments is going to be partially stochastic and highly dependent on the
underlying genetics.

"As a European conservative, I truly believe that no life is unnecessary, no
life is wasted."

Hypothetical: You see, I'm a biomedical engineer (true). Let's say I build a
machine that can keep anyone alive. The machine is great, the quality of life
for the user is awesome. And it's such a great machine, it works indefinitely.
Here's the catch. To operate the machine takes 400 barrels of crude oil a day.
There's no way around this. Now. If health care is a right, and no life should
be unnecessary or wasted, then do people have a right to this machine?

Just to be clear, I don't think that no life is unnecessary or wasted, I just
don't think that health care is a right, and I think that people need to
accept the fact that they are going to die someday, and it's not such a
horrible tragedy if medicine cannot save them, even if a possible cure existed
and the only reason why they couldn't get access to it due to money.
Obviously, I am not heartless and I think that situation should be minimized,
via charitable actions - and I think that any system that tries to cover
everyone will wind up costing everyone more and having rapidly diminishing
returns in the face of reality, and will also really screw over corner cases.
If such a system has the capacity to appropriate money from people against
their will and the authority to make decisions for people, then the costs and
the injustices will pile up even faster.

~~~
dnautics
you know what. I know someone is going to criticize me for my hypothetical. So
I'm going to just say, this is not far from reality (although it is not the
reason why US healthcare costs so damn much). In 2004 Novartis reported that
they were making the anticancer drug discodermolide. From scratch.
(<http://pubs.acs.org/doi/abs/10.1021/op034130e>) This process started from
petrochemical feedstocks and largely used chromatographic purification steps.
According to FDA regulations, chromatographic media must be discarded after
each use and basically cannot be efficiently recycled. The amount of resources
that went into producing 60 grams of this drug is staggering - keep in mind
that it is estimated that _in the known universe_ only about 6 milligrams
total of the material exists. Unless this was some sort of sick PR stunt,
Novartis clearly thought that in the short term it could actually make enough
for this drug to be profitable (it failed phase I trials on safety grounds,
which gives you an idea of how bad an idea this was in the first place since
to fail a safety trial on a cancer drug means your candidate really sucks).
But the question of long-term sustainability of medical care is going to
become very real in the not too distant future, whether or not this country
and others gets the cost of our medical care down due to its structural
problems.

Whether or not we like it, the issue of health care rationing is going to but
up against the problem of limited global resources.

------
groaner
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 has done this, I'd love to hear your stories.

~~~
bartonfink
I haven't done so, but have done a fair bit of investigation. The most
technically correct answer I can give is that it depends on where you're going
and how you leave things in the US.

First, where you're going. You obviously want to go somewhere with better
healthcare than the U.S., which isn't all that difficult to find. The ?
becomes what your obligations will be as a somewhat permanent resident and how
you can maintain that status legally. That's really going to be location
dependent, but you should look and look hard before you leap, because the
consequences could be unpleasant if you screw up. I believe there are agencies
that cater to potential expats like yourself, and if you're really serious
about this you should talk to one of them to make sure you don't step on any
landmines in the process.

As for the second ?, The US assumes that you continue to owe US taxes as long
as you maintain your citizenship, and they make it difficult to give that up.
I don't know exact figures, but you are exempt up to something like $78000 of
income and are allowed to write any foreign taxes you pay on that off, but as
long as you are a US citizen you're on the hook. If you move to Singapore and
strike it rich, unless you pay the IRS you could have extradition hearings in
your future. I'm pretty sure the deficient US health care system would be
pretty low on your list of worries in that case. Again, this is the sort of
thing a professional could tell you more about, but this is definitely out
there. I don't want to advocate giving up your citizenship lightly, but know
that the US is unique in this sort of taxation and making a fortune abroad
without paying US taxes would almost certainly be viewed as some sort of tax
evasion if you didn't proceed very carefully.

~~~
prostoalex
$92,900 in 2011
[http://www.irs.gov/businesses/small/international/article/0,...](http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html)

~~~
r00fus
Considering that's a large salary in many first-world western-european
countries, it's probably only a follow-on consideration (ie, GP-comment's
hypothetical striking it rich in Singapore).

Furthermore, at that point, you will most likely be able to shelter your
income anyway by putting it into a corporation, and you shouldn't be worried
about striking it rich abroad.

~~~
prostoalex
It's a standard deduction, not taxable income. Having a salary less than that
is only favorable to you as a tax payer.

Once you shelter into a corporation, how do you un-shelter? Assumption being
that you do want to spend a little of it. You can pay it yourself via salary,
or dividends. However, from income tax perspective it's all income anyways.

------
travisglines
We've been working on a startup and this has been a constant worry for us. I
imagine that a lot of startups are one car crash away or one sickness away
from failing.

~~~
MJR
The second part of that statement is that a lot of individuals are one car
crash or one sickness away from suffering a serious financial hardship on top
of a serious medical issue. If the startup suffers, it's collateral damage.

------
champion
Come to Massachusetts! Our health care reform means that the market for
private insurance isn't insane. You can afford reasonable coverage for
reasonable price through the MassConnector group plans, and they can't deny
you because of pre-existing health conditions (they only ask age / number of
dependents).

While far from perfect, it is a significant improvement for entrepreneurs who
may be buying insurance for themselves and for early employees before
funding/revenue to pay for traditional coverage. There are a lot of folks who
cannot go without insurance but in many areas the cost of buying outside of an
employer is prohibitively expensive or restrictive.

------
athst
I certainly think so - I'm in the process of quitting my job to work on a
company, and the health insurance will be my biggest expense other than rent
and food. If it was more affordable, I could survive a lot longer without
running out of money.

Also, if you're starting a company, you shouldn't even consider not having
health insurance - while expensive, at least there is a limit to the downside.
Without it, your potential downside is almost unlimited.

------
klochner
yes

------
abalashov
It hasn't been for me, but only because I (and other, likeminded people) have
chosen to bank on the fact that we're relatively healthy so far--knock on wood
--and chosen to forego it.

I don't mean that I'm literally uninsured. I mean that I have one of those
"catastrophic" high-deductible policies that so many young people are stuck
with, so for any kind of routine procedures or office visits or anything
barring an improbable tragedy, it's as good as not having a policy at all. The
charges are simply passed through to me unadjusted. And when you have a policy
like that and run into a large claim (say, a $90,000 hospitalisation with an
acute condition), you have a fairly high chance of being denied a claim on the
basis of a "pre-existing condition" or some other reason they will find to try
to deny your claim. Insurers have entire departments just to deal with
disputing large claims. Much of the Obamacare "pre-existing condition"
legislation doesn't apply to this scenario, or grandfathers in policies
written in prior years.

An actually _decent_ policy - some kind of low-deductible, high-choice PPO
plan - is just absurdly expensive from an operational expense drag point of
view, even for an ostensibly healthy 25 year old.

~~~
danssig
If you have catastrophic you may as well be uninsured. Can you take a $10k
hit? I'm guessing you can't.

~~~
abalashov
Absolutely not.

~~~
danssig
Then what are you paying for? :)

------
DuckPaddle
Insurance in general is an impediment to entrepreneurship. I know our
insurance costs are way more per unit than those of larger companies. I don't
know if the higher costs could be attributed to the marketplace or the fact
the larger companies are much more sophisticated in their risk management.

------
itsnotvalid
Next time try posting links that doesn't need subscription - not all of us
here are backed by institutions to read hacker news :-)

[http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pd...](http://www.rand.org/pubs/working_papers/2010/RAND_WR637-1.pdf)

(viewer:
[http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%...](http://docs.google.com/viewer?url=http%3A%2F%2Fwww.rand.org%2Fpubs%2Fworking_papers%2F2010%2FRAND_WR637-1.pdf))

(scribd:
[http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp...](http://www.scribd.com/full/49777774?access_key=key-1z4k6uefp6ug6ewa282e))

Not as well formated as ScienceDirect (which is sourced from the Journal of
Health Economics) but doesn't require a subscription.

------
tdmackey
Dont have immediate access to the paper. I agree it is a hurdle to overcome,
but I don't really know how many startups ultimately don't get started or fail
because of it especially if you look at the number of startups and
entrepreneurs consistently popping up in the US compared to some countries
where the government provides universal healthcare.

~~~
keeptrying
How is this problem overcome ? Ihave a few ideas but no real specifics. A
website with specifics would be very useful.

------
bengebre
A lot of us New Yorkers use the Freelancers Union for health insurance. It
solved this exact problem for me. They're more of a service platform for
independent workers than a union. They've got health, dental and 401k plans.

<http://www.freelancersunion.org/>

~~~
klbarry
I've seen their advertisements, they look awesome. If I wasn't already covered
by my parents plan I would go for it.

------
cletus
To give some perspective I now live in the US and have, as best as I can tell,
excellent insurance from my employer.

I am Australian and have lived in the UK, Switzerland and Germany so I can
compare all of these.

Australia has a mix of private and public health care. You pay 1.5% of your
income as theMedicare levy. If you have sufficient income but no private
hospital insurance, you pay a surcharge (1% iirc). The previous
(Liberal/National, which is actually conservative) government made private
health insurance tax deductible. I can't remember but the current government
has tried to roll that back but I think has so far failed (to get it through
the Senate).

Private health insurance pays you a portion back of each expense, a system I
actually think is not good. It encourages people to "get their money's worth".

Doctor surgeries are all small businesses so they have differing hours, costs,
etc. Medicare pays for a part of that bill. Low income earners can generally
get their doctor visits bulk-billed, meaning the practice only charges the
government rebate so there is no out of pocket expense.

For years I had no private health insurance. Any serious hospital care (eg
cancer treatment, transplant, serious injury, heart attack, stroke, etc) could
be covered in the public system. The private system seems like it's for people
who don't want to share hospital rooms.

Some so-called elective surgery can have long waiting times which is why I say
I'm self-insured. If I needed something like this I could pay $2-5000 out of
pocket (large medical expenses are tax deductible too). Not everyone has the
disposable income for that.

The one weird thing is private health insurers have "community pricing" (I
forget the exact term). That means they charge the same premium for everybody.
The net result is young people don't get it and old people drive up the
premiums.

The UK system is similar except they take 11% of your income (capped) but
health care is basically one huge bureaucracy. Seeing a GP is generally a
pain. You have to be registered with a surgery. Often their books are full so
you can only get into the one open from 9-4 Mon-Fri. Since that's typically
near where you live going to the doctor typically means taking the day off
work.

The UK has long wait times for some even common medical procedures (eg certain
scans) to the point they've started paying Germany and other countries to help
clear the backlog.

Seeing a doctor is free though but IMHO this leads to overuse. The cliched
example is of the old age pensioner seeing the doctor to have someone to talk
to. Also for a procedure or seeing a specialist you'll receive a letter
telling you when your appointment is sometimes 3+ months later and it might be
a few days away. Can't make it? Back to the bottom of the list.

Switzerland has a system of mandatory insurances everyone must by law have
various health and unemployment insurances. I don't remember the specifics but
I had lime 5 policies iirc.

Actually Germany I know little about because I never used the system while
there. It has a reputation for efficiency though.

The US system is IMHO the worst in the developed world (and even some
developing countries put it to shame).as people have said the best insurance
is negotiated at group level. Good for large companies. Bad for the self-
employed, small businesses, entrepreneurs and individuals.

What's more, if you start to incur large expenses the companies are motivated
to find some way to disqualify you. And then good luck as you'll have a
preexisting condition. Last month a story made the national press of a veteran
in cancer treatment being dropped for being 2 cents short on paying the
premium.

Defendants of the current system argue free market but the result is the most
expensive health care I've ever seen. Drugs, hospitals, doctors, you name it.
The litigious nature of the US probably doesn't help.

Actually even Australia has the problem of litigation in certain fields.
Obstetricians pay upwards of $200k a year in malpractice insurance due to a
lot of frivolous litigation, forcing many out of the profession. It's a field
dominated by women who more often than not end up having families at which
point it is uneconomic to work part time in that field due to the insurance.

So if I ever went to work for a small start up here I'd take advantage of
COBRA (iirc) for 1+ year then get insurance with a huge excess and I ever
needed, say, cancer treatment I'd go back to the UK or Australia (I have dual
citizenship).

Not everyone has that option.

I get the feeling many entrepreneurs are young and gambling with their health,
figuring it's cheaper to declare bankruptcy pr just not figuring on unintended
expenses like a motor vehicle accident.

So anyway I'm not against health insurance but group insurance is a huge
problem and people need the right to get insurance. Honorifics are better
insurers than for-profits (IMHO).

~~~
Experimentalist
> Defendants of the current system argue free market but the result is the
> most expensive health care I've ever seen.

Interesting, but the current system in the US isn't "free market".

It's communistic.

\- 80%+ of health care expenditures are made by a 3rd party not the person
requesting a service. (employers, insurance, government)

\- 40-50% of health care expeditures in the USA are made by the government.
(free market usually doesn't mean paid-for/run by government)

\- There are thousands of government regulations and incentives which created
the current system we have.

That's a free market? You must not understand the free market- either that or
you are intentionally misleading people.

Those in favor of a free market, including myself, are NOT defending the
current system - they are against a complete government takeover of the
system.

------
keeptrying
What are the solutions employed by all the startups that get started?

------
hugh4life
Yes, but government ran healthcare is not the answer...

~~~
jonknee
What is the answer and is there anywhere in the world that it's currently
functioning?

~~~
hugh4life
I'm kind of fond of Singapore's health care system...

[http://econlog.econlib.org/archives/2008/01/singapores_heal....](http://econlog.econlib.org/archives/2008/01/singapores_heal.html)

[http://blog.jparsons.net/2009/08/why-singapores-health-
care-...](http://blog.jparsons.net/2009/08/why-singapores-health-care-system-
beats.html)

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

~~~
lawnchair_larry
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.

~~~
Experimentalist
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...](http://www.reuters.com/article/2009/03/02/us-hospitals-usa-
idUSTRE5216G320090302)

~~~
mgkimsal
"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."

That ideal doesn't exist, and probably can't, in the real world. In most
situations, the easiest/fastest/cheapest way to 'profit' is by getting more
customers' money, and spending less of it. When 'spending less' means
customers get less care (the easiest way to spend less) then people will
suffer.

The 'innovations' and such... well... I've no doubt some would/will happen,
but how much 'innovation' can there be in insurance? We saw a lot of
'innovation' in the financial insurance markets (CDOs and such) and that
wasn't a resounding success.

The bigger problem with your premise assumes that people are smart with
respect to choosing between multiple private insurers each offering
'innovations' of their own. Most people wouldn't be on day 1 switching away
from their current system, and it's not something that you can easily learn
from or experiment with. With consumer items, I can buy them, try them, and
recommend them to my friends if I like them or not. It's a lot harder to try
out various insurance programs for multiple surgeries to see how each one
fares in _your_ particular situation.

Hospitals are often losing money because they're covering the cost of
procedures for people who can't pay.

Long and short, hospitals and medical entities exist to help people with their
most basic needs - health and life. People generally go to hospitals when they
are sick or dying. Seeing 'for profit' companies making a profit from misery,
illness, sickness and death isn't something that is going to sit well with
most people.

~~~
Experimentalist
> That ideal doesn't exist, and probably can't, in the real world.

Yes it does, and it's a reality throughout the economy not just an ideal.

> Hospitals are often losing money because they're covering the cost of
> procedures for people who can't pay.

No, that's not true. The costs of unpaid bills is very low and not a major
cost.

> When 'spending less' means customers get less care

That's not the case. Look at the horrible reputation of the VAs and government
medical facilities vs. privately run.

My grandfather had free VA due to his military service, but bought additional
medical insurance so he could go to a non-VA hospital instead-- the reputation
of VA hospitals has been horrible.

Also there are many top-quality for-profit hospitals, some of the most
respected in my area are for-profit hospitals. But also many doctors in
practice for themselves provide excellent services as a for-profit practice.

> Long and short, hospitals and medical entities exist to help people with
> their most basic needs

That's why profitability is important, because it drives down costs and
encourages innovation, as opposed to lack of profitability.

> Seeing 'for profit' companies making a profit from misery, illness, sickness
> and death isn't something that is going to sit well with most people.

Profitable companies help people every day, they make a profit providing a
valuable service which is complex and requires a lot of investment and
expertise.

They provide advanced medical services and pharmaceuticals and they save
millions of people's lives. If you claim otherwise then you are simply
clueless.

Profit is what lowers costs and drives innovation and investment. I don't know
why you would be on an entrepreneur forum if you think profit is bad-- without
profit there would be no entrepreneurship.

------
notlion
yes...

------
PixelJ
Answer: Hell yes. Self-insurance is absurdly expensive while group insurance
outside of an employer or credit union is harder to find than a Republican
with a conscience.

The lie that "Obama-Care kills small businesses and/or jobs" is a smokescreen
for the truth: Healthcare reform would free employees from indentured health
care servitude and allow small businesses to hire more competitively, creating
more jobs.

~~~
pg
This comment is, unfortunately, an illustration of how sites go downhill. It
has 19 downvotes, including mine. So how does it have so many points? Because
it has twice as many upvotes.

When badness arrives in online communities, it arrives first in forms that
make people invite it right in.

~~~
brlewis
It's also an illustration of what stops them from going downhill. Replies like
neilk's do more to tone down the rhetoric than any voting button could do.

