Who can bootstrap a business like this? So people are staying with their powerful big corporations if they can't get millions in funding for a startup (and outside of tech this is simply not even a consideration).
Edit: and if at some point you hire an employee, you will need / want to provide them with health insurance, and it will cost just as much. Large corporations have an advantage in that they negotiate lower premiums in bulk. Add this as yet another barrier to entry, along with their lobbying for protectionism, tax loopholes, their ability to hire huge teams of tax lawyers and accountants, and if you really start to get their attention, they can sue you baselessly by throwing lawyers at you to keep you in court. Merely defending yourself and getting to the point of dismissal is unaffordable for a budding small business.
Take a look at S&P500's profit margins. They are at record highs and not coming down as economics teaches us, meaning new entrants are not coming into the market.
It's a problem with "Health Insurance in the US" as opposed to Obamacare.
I do advise that people not write-off criticisms of ACA as right-wing hysteria right now; the 2017 increases are really unbelievable in many states (Minnesota: 50%+). Everyone can browse these rates online.
Its absolutely silly we still tie retirement accounts and healthcare to employers.
Donald Trump's platform would actually allow individuals to take the same tax deductions on health insurance that companies get:
"Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system. Businesses are allowed to take these deductions so why wouldn't Congress allow individuals the same exemptions?"
John Mackey had a very rational proposal as well:
"Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair."
"For the 2016 tax year, overall employer plus employee contribution limit is 100% of compensation with a maximum of $53,000"
So why isn't Europe an entrepreneural juggernaut? Tech scene in Europe seems worse than the US IMO.
We should be hanging the people that caused this, but we're too nice and we won't until it all ends up like Venezuela.
That said, there's much more to "entrepreneurship" than tech startups! Opening your own restaurant - not a chain franchise - is entrepreneurship, too. Or a barbershop, or making custom clothing, or running a small theater, or any number of other things. Small business is mostly small, not a stepping stone on the way to being huge.
In those terms, is the US actually doing better than Europe? Do entrepreneurs - not the millionaires, just the people who don't have to answer to anyone but themselves - do better here, or in Europe?
Otherwise I believe it's a pretty good place to start a company. Our income taxes are equivalent to California and I believe our corporate taxes are lower but we have health care and relatively cheap housing downtown thanks to a housing development boom.
We also have a startup founder visa and an easier immigration policy. Access to seed capital and higher-end talent is the only constraint.
By contrast, Berlin seems to be doing fairly well, despite a language barrier (for English speakers). Israel (Tel Aviv) as well.
The specificity of high tech to the SF-SJ region is curious.
At the time, I was 29 years old and spent about as much money on insurance as I spent on food. It was my single biggest expense after rent.
The right-wing hysteria part is the (false) idea that premiums didn't go up like this pre-Obamacare, as well as the idea that "roll it back" is a tenable solution.
> A new analysis from the Urban Institute found that the average unsubsidized premiums in the Affordable Care Act exchanges, commonly known as Obamacare, are actually 10% lower than the full premiums in the average employer plan nationally in 2016.
> According to the Kaiser Family Foundation the average cost of the second lowest priced silver metal plan, also known as the benchmark plan that is used to set subsidies, will see its price increase 9 percent next year. That's significantly higher than the 2 percent increase for these plans this year, but it's south of the figures provided by Trump.
The ACA was flawed from the start. My takeaway from the whole fiasco is that even the smartest, most well-educated policy analysts and lawmakers can allow some combination of enthusiasm, politics, and momentum to blind themselves to the most basic predictive models of human behavior and incentives. When the law was published it was obvious to me how insurance companies would make money - you create the narrowest, cheapest network possible in order to cherry-pick the healthiest patients, leaving competitors dumb enough to have broader (more attractive) networks to soak up the most expensive cases (and lose money). This is exactly what happened and the so-called ''death spiral'' will start next year when (my prediction) 1+ million unsubsidized middle class families refuse to pay for the next round of rate hikes.
I'm 100% for free, universal health care for all Americans. I don't think we're that far away. The bemused Federal Reserve searches for helicopter drop scenarios - Federally-funded (or re-insured) universal health care is not a bad option. I'd much rather bleed out the treasury in order to build a great health care system than in the middle east or some other boondoggle.
It may not have been cheap, but it was cheaper than the "insurance" I as a 37-year-old perfectly healthy individual am now paying. >:(
I mean before Obamacare.
It may seem like a tax on working people, but really, it is a payment for a very real benefit: a dramatic change in your personal healthcare risk. When you can purchase health insurance at any time even when you're unhealthy, you are essentially being granted an insurance policy for expensive, chronic conditions without even having to purchase anything.
You must mandate participation through payroll taxes, but also ensure services can be affordably provided to participants. Insurance companies are still raking 20% off total premiums paid; that's money that could go directly into providing care.
One angle of the employer-based system is the "healthy worker" effect. It's almost impossible to answer questions such as "is working in a plutonium factory bad for your health?" because almost any population of workers is healthier than the average population because less healthy people don't work.
Not exactly. Obamacare has other provisions that make this much worse. For example, Obamacare only allows insurance companies to charge older people at most three times as much as younger customers.
"But it’s worth noting that prior to 2014, there was no federal standard in terms of how rates could vary based on age. It was common for health insurance companies to charge older applicants five or six times a much as they charged younger applicants." 
This is a way of subsidizing the old (a better organized interest group), but it makes health insurance massively less cost effective for younger customers.
Everyone in the working class in the US is a single major medical event away from bankruptcy, insurance or not.
No, most of productivity growth in industrialized countries arose from economics of scale from multinationals.
Its the same for China, Germany, South Korea, Japan, Soviet Union ...
Countries do not industrialize due to small business and entrepreneurs - regardless of much the average american likes to think that is true.
You do this by making 'basic insurance' something everyone has, and a negotiating pool that more or less dutch-auctions per market with the practitioners. You might also include quality control measures like allowing patients to see any doctor they prefer from within the list (of doctors that met the group bid rate), and also allowing criminal mal-practice but not financial liability as a means of stripping titles from those who should not practice medicine. (The liability would be implicitly recognized as social; no big payout, but what life there is that is left you would be some degree of retired.)
We are saving 1.37% next year by going to a plan with 3k individual 9k family deductible. If we didn't do that premiums were going to rise by 10.4% next year.
Our rates have gone up every year since I've been working here.
The total EOB (Explanation of Benefits) costs value for the medical care my family got last year was under 6k. This was unusually high because we had two minor surgeries. The two years prior were much closer to our baseline of about 3-4k of medical care. This includes shots for the young kids, regular checkups, the occasional prescription and one semi-emergent emergency. One year a kid broke her arm, the other my wife needed an MRI.
I know I represent a young family with relatively few health problems but so far, just since being on my current plan, we have paid 90,000 dollars (costs were slightly lower than our current premiums in prior years if you are doing the math) and received (at the high end) 18,000 dollars worth of medical care. I have paid 72,000 over just 4 years for insurance against catastrophic illness, disease or trauma.
As I sit here writing and calculating this I have this question in the back of my mind - Is it worth it?
I don't know. I think that question is ridiculous but I don't know what other question to ask.
But have you seen how they gouge the uninsured? I was in a minor bike accident last year and I had a 5k deductible. Just had an ambulance ride and got checked out at the emergency room. The bill was $6000 without insurance, which was reduced to $1500 with insurance.
Hospitals have such poor cost accounting.. they basically make something up if you're uninsured. It completely eliminates going without insurance. The charges would be outrageous.
Edit: The 4x multiple in my bill isn't anywhere near the worst. There are hospitals that charge up to 12x (so 1500 turns into 18000):
Add to that, hospitals won't tell you what something will cost up front... so you get to find out when they send you the bill.
I would love to be able to get, from my insurer, a low cost option just for this: patient pays 100% of their standard negotiated rates. I go to the same network, they pay the doctor and bill me for the payment. Premiums just need to cover their admin cost plus some insurance that kicks in if I do not pay.
Doctors should not care -- they still get the same $$ from the same source the same way. Catastrophic coverage can be arranged separately, but the above schema I think would provide much of the current insurance benefits at the much lower cost.
The benefits of health insurance aren't those your alluding to here.
The benefits of health insurance are the flow of money from your bank account to the insurer.
Your premiums are going up 74% next year, what are you going to do about it? Complain on an internet forum. Go ahead.
There are plenty of generic meds that cost less than $10 with the discount negotiated by the insurance company but cost upwards of $100 if you don't get the discount.
The calculation that "you get nothing with a high deductable plan" is not entirely accurate if you take these into account.
(that's what lots of drug discount cards are, you get a negotiated price instead of the cash price)
So having a PBM price is an included detail of insurance plans, I'm not sure how useful it is (I expect the formulary used by cheap insurance ends up similar to the free stuff).
What's also annoying is you can't determine ahead of time what something is going to cost, so even when it's not an emergency you can't shop around.
Well, it's insurance. It's there so if you have twins in the NICU for two months because they were born in the second trimester (like I did) you don't wind up with a multi-million dollar bill to pay. Most people will incur more premiums than benefits. That's normal.
At what point does subsidizing other people's outlier events become unacceptable? I will never have kids (biological issues). I will likely die from a one off critical heart failure (also genetic in my family) rather than anything that will cost me significant amounts of money. I do not drive, leave the house much, or do any risky activities, yet as the parent said, I pay _hilarious_ amounts of money each year for insurance.
And the real kicker for me, I've developed some conditions related to stress-side effects, sedentary behavior, and joint issues because of my work. So the insurance money would be BETTER SERVED being reinvested so I could stop working in such a way that damages my body.
Now, you can say this is selfish, but as I said, I'm taking an intentionally selfish point of view for this argument. At what point do we draw the line of "I need this money for me now" or "someone else needs the net effect of re-balancing costs across a society?"
I will openly admit that as I've gone through a decent chunk of my career without incurring any major events, but while incurring major costs, where I sit on being OK with the current arrangement has shifted.
At what point do we stop holding up infant mortality as the gold standard of medical care? Spending untold resources on keeping alive infants who would otherwise die is inherently dysgenic, and allowing whatever conflagration of genetic anomalies that contribute to the necessity of postpartum care will inevitably lead to higher incidences of these cases in the future, as these genes are allowed to propagate into future generations.
Infant mortality is emotionally devastating, but preventing it will almost certainly increase our society's long-term medical costs.
Finland which is number one, "used the least resources and attained average results, making Finland the most efficient public sector health service producer according to the study's authors"
Granted it's way better than many other countries, but still we shouldn't be so off.
Just look at the established tradeoff our species makes- our children are born helpless. Isn't caring for them dysgenic? But, being able to care for & protect them enables significant brain development to happen outside the womb.
Swaddling, clearing a wrapped umbilical cord, suctioning the nose & mouth... there are lots of things we do that improve mortality that are trivial.
That said: most of the improvement is through public health measures (clean drinking water, sewerage systems, municipal waste collection) and nutrition. Heroic measures are very much the outlier. That may be an even stronger argument against them -- other than as a learning experience, the resources they consume relative to providing much more basic, and effective, outcomes interventions is difficult to defend.
From the CDC: Infant mortality in the US <1 year was "up to" 30% in 1900. Maternal mortality was around 0.8% in 1900.
> Spending untold resources on keeping alive infants who would otherwise die is inherently dysgenic, and allowing whatever conflagration of genetic anomalies that contribute to the necessity of postpartum care will inevitably lead to higher incidences of these cases in the future, as these genes are allowed to propagate into future generations.
The closest thing I have to an answer for you is single-payer like the rest of the developed world, where they pay substantially lower medical costs for similar health outcomes.
I do hope to see our society mature a bit on end-of-life care. Dying is disproportionately expensive (http://time.com/money/2793643/cutting-the-high-cost-of-end-o...) and that money often results in little benefit to the patient (and at times, probably causes active harm).
It looks like many countries are moving that way in the past 20 years: https://en.wikipedia.org/wiki/Legality_of_euthanasia
Patients who'd like to undertake euthanasia and can't would get a DNR order. Medicare isn't spending massive billions on folks with DNRs - it's the folks that won't accept a terminal cancer diagnosis and put grandma through intensive chemo instead of prioritizing quality of life that costs.
But health "insurance" has crept into regular health maintenance. But that's not really insurance; that's more like an extended warranty for your life.
 And certainly things like dental insurance are pretty much just "extended warranties" rather than insurance against catastrophic expenses.
Those who work for a company and receive a W-2 form can look at Box 12 on the W-2 to see how much their employers paid for their side of their health insurance policy (coded with "dd").
You might think "who cares" but that's money that could have gone towards your salary.
I don't think this is in spite of subsidies but beacuse of them. Just like the epipen mess, the less of a bill the customer sees the more you can raise it.
Outside of health care specifically, this is also why disability plans tend to be relatively inexpensive for large companies to offer but are pretty pricey--when you can even get them--for individuals.
Same with disability, examine the individual coming in to make sure they don't already have a disability that's being covered, but after that why would the individual odds be any different than accepting a whole group? If you do an actual exam, they might actually be better.
There are non-employer group plans for certain types of insurance e.g. through something like the IEEE but generally not for healthcare AFAIK.
With respect to disability--leaving aside that an exam won't find all pre-existing conditions such as joint problems--there's still adverse selection. The people who would even apply for disability insurance are a higher risk pool (probably older for one thing) than the working population as a whole or all employees working at a large company.
Orthopedic replacement $23,000 one year. Other years combined $2600
Not worth it. But plan your surgeries and up the coverage for that year. That strategy can work (not dental)
Even with a high out of pocket it is smart.
That's for full coverage. No deductibles. Only things not covered are dental, vision and prescription drugs.
I have dental, vision and paramedical insurance for $1000 us annually. This covers most of my expenses, and also covers some things like massage therapy and physio. It's also as business expense, and avoids the need to pay into my provincial drug plan. So I more or less break even on this.
Prescription drugs? Depends on the province. In Quebec, if you have no other insurance, the public plan will take around $500 per year off your taxes and give you full coverage.
Personally, I have full coverage through my private health plan (the one that costs $1000 per year). I got it by being, among other things, a writer. That lets me get the group plan for writers. Most professions will have such an organization. Failing that, en entrepreneur can join their chamber of commerce form $150 or so a year, and get a similar plan for similar rates.
I would have been knocked out of business 3-4 times over without this. Major health issue that required surgery three years ago. Cost me $0. And in my first year I had to get my wisdom teeth out: fully covered by my plan. There's been a few other expenses, and also the ability to do physio et al for RSI due to computer work.
I can't fathom doing it the American way. My taxes are somewhat higher in Quebec, but the difference in health costs more than makes up for it.
In particular, I can't believe that with all those medical costs, you still have to pay large deductibles.
Oh, and the services here are good, and fairly for for things that aren't elective. And a private system exists too if you need to go faster.
High tax bracket in Quebec... $103K+ = 25.95%
Lowest tax bracket in Canada (BC)... $106K+ = 14.7%
That's added on top of the highest federal bracket of 33% for income over $200K.
I'd say Quebec taxes are a LOT higher.
We do have a 13% national sales tax which I don't think states have.
Yeah, for those earning over $200K it's quite punishing, and would probably amount to more than the health savings. I think there aren't corporate structures that make it less rough though.
In Quebec, at income X, my effective tax rate was around 34%, which includes federal and provincial rates. I did have a private plan at work although I don't fully recall how much it would cost me per paycheck, it was really low.
In NY, at income 3X (including exchange rate), the rate is similar, I think around 33-34% including federal, state and municipal income tax (which is ballpark 3%). I do have private insurance here which amounts to a couple hundred a month.
Personally in the end, I get better service in the States but I'm probably biased.
edit : Sales tax ~8.5%
So at the very high end, someone in NYC might pay 52.3% income tax (edit: marginal rate) and 8% in sales tax.
And at the high end in California (San Francisco), someone might pay 51.9% income tax (edit: marginal rate) and 8.75% in sales tax.
(This is a little simplistic; I think you can deduct state income tax from federal tax, lowering the overall high marginal rate somewhat.)
What you're talking about is the marginal tax rate, i.e. the limit as income -> infinity, but it's typically much much lower than this (even for the wealthy). Most people pay in the 10-20% range for federal income taxes. Millionares pay in this range too for several reasons, capital gains and write-offs.
The blue line on this plot shows the effective federal income tax: https://en.wikipedia.org/wiki/Income_tax_in_the_United_State....
Yes, this whole comment thread has been discussing marginal rates. I thought that was clear from mentioning tax brackets in both my comment and refurb's grandparent comment, which mine is in comparison to.
I've edited the comment to be really clear that this is not an average rate.
Edit: Whoops, and I left out FICA taxes and it's too late to edit the above comment again. That adds another 7.65% (W-2), up to $118,500; 1.45% above that, and a little more at the top rate.
As an analogy, it would be like comparing Buffalo's weather to San Diego's based on the average high temperature in the summer (which may lead you to believe Buffalo is hotter than San Diego).
Top federal rate in Canada kicks in at $200K (33%).
Top federal rate in the US kicks in at $415K (39.6%).
You've posted the bracket for US single filers.
For another point of reference, the top state bracket in California kicks in at $526k (12.3%).
We get a standard deduction, which varies depending on whether you are single, married, and/or have children. Deductions reduce your taxable income. For example a single person making $35,000 would get a standard deduction of $6,300 making their taxable income $28,700.
You are entitled to a dependent deduction, so if the hypothetical single person above has a kid he can knock another $4,050  off of his taxable income making it $24,650.
The other ways to reduce your taxable income for working people are retirement plan and health saving (HSA) contributions. every dollar you take out of you paycheck and contribute to either of those is not counted towards your taxable income. There are maximum amounts to both. Typically a person making $35,000 won't have much income available to put away in this way so working people don't usually get to take advantage of those . There's also flexible spending accounts which work the same as HSAs except if you don't spend the money input in a set amount of time you lose it. These accounts make sense for sunk costs like daycare.
Lastly there are tax credits. Credits reduce the amount of tax owed (as opposed to the amount of taxable income). For example, if my taxable income $10,000 and I was taxed at 15%, I would have a tax bill of $1,500. If I also got a $500 tax credit, my tax bill would be reduced to $1,000. Parents get a $1,000 for each child. There's also a childcare credit which is a pain to calculate so I won't do it here.
There are of course other exemptions and credits but for most people, what I've listed sums up how our tax code works.
Nit picking here: There's actually a 10% bracket below the 15% one.
Also, you're numbers are a bit inflated if my experience is anything to go by. I have insurance through my company but my wife is on an Obamacare plan (because it was cheaper and better than what my company offers through a national HR company) for herself and our three children. We pay about $6000 per year for normal deductibles and a plan comparable with what she had working for the state of Texas (really good) before she went back to school. My only complaint is that this insurance company (Humana, I think) is very particular about the prescriptions it allows but I think you get that with any insurance company.
We were surprised the insurance was so good for so (relatively) cheap, honestly.
Maybe it is time for countries with nice weather and cheap health care to woo Silicon Valley...?
Something like: "Get here for less than a month's health care, do Skype meetings and you'll need a telescope to see the end of your startup's runway". :-)
Kenya and Tanzania have some good beaches and they got OK Internet now? Or most places in Asia? How cheap is it to live in a small fishing city in Japan?
I smell a business opportunity.
I think the only place small businesses are really thriving in Europe is Germany.
Mind you, so are a lot of other places. I see from http://www.rudi.net/node/22184 that Cambridge is very clone-ridden, which feels about right. It's an odd collision between architecturally interesting colleges and medieval street layout on the one hand, but an almost total lack of properly local shops due to high costs. Since the takeover of Heffers and Eaden Lilley the only one I can think of is Mackay's.
I am sticking to the major carriers as I'm skeptical of the networks these small no-name providers have. But even if I browse all carriers, the cheapest platinum plan is $20,000/year: https://nystateofhealth.ny.gov/individual/searchAnonymousPla...
Subsidies - let's say you pull $70,000 your first year. Your subsidies will be $4,000 per year, so the platinum plan is still $16,000/yr net. After-tax on $70k is $54,000. That means your healthcare premiums alone are 30% of your post-tax income even with the subsidy! That means only $3,150/mo remains for your rent, transportation, food, utilities, etc...
Per this calculator:
subsidies in Albany are $578/month for an income of $70k, with an average cost of Silver plans being about $500/month post-subsidy. At ~9% of income, that's also tax-deductible spending.
We're discussing me working remotely (all of us relocating) from Panama or Belize; same first world income without the requirement to buy US health insurance (requirement is waved if you reside outside the country for 330 days/year). Our costs then drop to $3k/year for family coverage.
Last year I had cochlear implant surgery. The cost of the operation & implant is probably around $40k - $50k. My out-of-pocket expense was $410 for the overnight stay in hospital and $35 for painkillers. My premiums haven't changed since the operation.
For a quick comparison in rates vs. Obamacare plans, here is my insurance company's website: http://www.bupa.com.au/
Suffice it to say that I ignore emails from American recruiters.
Also of note is the way pharmaceuticals are priced in Australia. None of this EpiPen price hike type of nonsense. The government body Therapeutic Goods Administration negotiates all pharmaceuticals offered in Australia, and agrees on what they will pay the manufacturer. The public just pays A$39 for any drug, even if it costs the govt $100,000/yr.
It's not possible for this stuff to adjust instantaneously. The economy takes a long time to move. Profit margins are cyclical; they will decrease as inflation creeps in and wages and capital costs rise at a rate higher than prices can increase. Input costs are extremely low right now.
Take a look at the data; we have 10 years of above average margins following 10 years of below average margins.
This is a little high, and depends on your income. More likely it's 6-8k in premiums for a plan with a ~1,500 deductible, no co-insurance.
It's still way too high, but it's not that insane.
Note: that deductible is yearly and applies to literally everything, even a $150 doctor's appointment.
"On average, small businesses paid about eight to 18 percent more than large firms for the same health insurance policy"
Not sure how many of those small businesses bought directly, or from the ACA exchanges.
Fixing this should have been one of the primary objectives of healthcare reform, and it still makes sense to try and address it now.
Tying health insurance to a company is an ancient and legacy system that needs to go away. It makes entrepreneurship much more difficult and leads to things like ageism and making it difficult to change jobs or start companies.
We don't get other insurance from our company, not auto, not life, not home, why the hell do we bind our most important insurance to employment?
ACA was a start in that you can now actually get coverage (though not that great). In 2010 when I went fulltime on my business I got denied for about a year, under 30 and barely ever used healthcare. The same companies I was insured under at fulltime jobs wouldn't cover me individually. I was blown away and a bit scared, I knew then how bad the system before ACA was and it isn't much better now.
The main cause of price disparity and risk is tying it to employment, we take the costs and hide them in insurance and employers backroom dealings, noone knows what anything costs because noone pays it directly.
We need insurance companies to be consumer facing not employer facing, we need new competition in new insurance companies that are like that (more like Geico, Progressive, Nationwide for health not just auto rather than these employer focused companies in Aetna and Bluecross et al).
We need to unlink healthcare from a job! It is becoming easier to start companies in any country where healthcare is not part of the normal benefits of a job. In the US we could start by making it illegal eventually to provide healthcare from a job (but providing extra money for it is ok). Eventually people will move to independent insurance or some public system like medicare for all. That way when you leave your job or start a company, it doesn't involve a heavy burden/risk on your health and insurance.
Side note, every year since ACA has started I get my plan cancelled at the end of the year. They have rules in raising rates so they just end the plan and force you to jump on a new one. So every holiday season I get the joy of signing up to another freaking plan. I have no idea how this doesn't add tons of admin costs across the board. What a waste. And you can only join on enrollment not like every other insurance ever in that you can join at any time. The current insurance companies are trying to kill ACA and they were not setup to be independent insurance companies, we need better competition and a directive to remove healthcare from employment. Health insurance is the most non-independent and non-consumer friendly product in the US because it has never seen a real market, it is largely an employers service not individual consumer service.
Sooooo much waste. Sooooo much inefficiency. The problem is the cost is too high! So why, oh why oh why, is NO ONE TALKING ABOUT FIXING THE ARTIFICIALLY HIGH PRICES?
Because those who make money off the system are controlling the narrative. They are more than happy to have the population "empowered" by increasing insurance coverage. More money for them. More reason and excuse to increase the costs even further.
There is zero reason why a doctor's visit can't cost $100. Maybe less. Break something and need a few x-rays? $100 each, max, including development and reading costs, everything. Need an appendix or tonsils removed? $500 would cover pretty much everything. Sure, such things aren't cheap, but they're survivable. But as soon as we somehow decided we needed "insurance" for such routine expenses, the costs shot up and never looked back. The actual consumers of health care never see the price tag, and - surprise, surprise - the costs have no real reason to stay held back. The systems have no incentive to stay efficient and accountable.
I'm no stranger to the issue, having worked many years in the same dirty industry as you, but on pharmacy benefits side.
It's not just one particular group getting rich in this sector; healthcare is a giant gravy train for everybody: you, me, insurance companies, pharmacists, hospital systems, drug makers, diagnostic tool makers, dme makers. Everybody is getting rich. Where do you even start?
Every aspect of our society minimizes or ignores the fact that our bodies need occasional attention. The public at large needs to be told the reality that maintenance is incredibly important. Getting teeth cleaned every 6-12 months, getting a colonoscopy at age 50 and every decade thereafter, getting your eyes examined every year or two - these should be seen as routine and just as expected as needing to mow your lawn or buy another gallon of milk. The idea that we don't need to budget for such things and just rely on "insurance" is asinine.
I encourage everyone I know to budget and save for predicable expenses, have savings, and only use insurance for catastrophic coverage.
You're rated on what you acheive, not what you spend (as a healthcare provider).
This is one of the outcomes of oligopoly, and a system that encourages oligopoly (see: "legal" tax evasion).
Google and Amazon, in particular, have their tendrils extended to many more areas in tech than Search, Affiliate Marketing, good Hardware, and selling products at cheap prices and highly developed operation systems.
In fact, one of this year's most successful tech IPO, Twilio, put the disclosure on their filing that their entire business is toast if AWS begins offering a VoIP / SMS delivery service and start undercutting their costs.
The same happens in transportation, restaurant business, hotel industry. Firms get bigger since 1800. Naturally, the number of new firms decline. In govt stats, it appears as "fewer startups."
Meanwhile, the economy grows thanks to productivity gains in big companies. So what do we want: productivity or new small businesses?
Have you ever worked for any "fortune 50"? Even Google is bureaucratic nowadays.
Large organizations get their power from their size, leveraging cheap labor, not paying taxes and so on.
This is more of a problem for medium companies wishing to not get acquired, not so much a roadblock from small firms.
Huh? Haven't small firms pretty much always been funded by personal saving of the founders, sweetheart loans from friends and family, and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders?
Banks aren't interested in lending directly to businesses until they are large enough to have concrete assets to secure the loans. And they never were.
Take retail for example. Quite a lot of small to medium retail operations do not (cannot) afford to pay upfront for all their inventory--especially for seasonal events. A retail store might double or triple their inventory on hand during November, in anticipation of the holidays shopping rush in December.
So the stores buy on credit. The credit comes from their suppliers, not a bank--usually some type of payment terms like net 60 days.
Of course it's not like manufacturers or suppliers have giant piles of cash sitting around either. Often they are also accessing credit themselves, in order to provide these terms to the stores which are their customers. If they are bigger than their customers, they might have more options for accessing credit from banks or other financial institutions. But it might be that they are also receiving credit their their upstream suppliers, who are themselves accessing credit from financial institutions.
All this is to say: even small firms might be affected by the ease or difficulty of accessing credit from financial institutions, even if they are not accessing it directly themselves.
> and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders?
Consumer credit has also changed. It's harder to extract value from your home now than it was 10 years ago. Banks have higher underwriting standards and are themselves subject to more regulation (from the CFPB for instance).
The macroeconomic environment where everything relentlessly consolidates is the problem. For software, entire categories are either dependent in advertising and not long term viable or are scoped from a revenue point of view from bundled offerings by Microsoft, Google, Oracle, Salesforce, etc.
Every other business is the same way. My neighbors dry cleaning business was forced to use a centralized plant because they just couldn't compete with the scale of the local big consolidated industrial cleaners.
You're damned if you put your idea on the net and damned if you don't and it's all getting disheartening. I just want to find a career so I can go out and court someone but even the people with CS jobs that I know are constantly complaining of work / life imbalance and not getting to see their loved ones in person enough. Everytime I try to start studying some topic in the hopes of pursuing a living the shellshock of robophobia and the likelihood I will be too late overwhelms me. I can only cry at that leaked Clinton speech where she says we know what to do with the 120 IQ kids, but not the 100 or 80 kids. Well here I am at 145 mopping floors and literally shoveling shit despite only ever being excellent in school I guess it's just bad genes because my uncle could solve a Rubik's cube blind and built all sorts of electrical contraptions and has been a homeless drunk for decades. Here I am, another sandwich eater in front of thw trash pile as in Godard's weekend.
Finally, at 30 I started to push hard and have found some kind of start a little over a year later. What tipped me over the edge was knowing that I could, in fact, run out of time to try stuff abstractly as I had been doing. I had to commit in a more concrete way to my goals or it would just get harder. And the thought of not doing it, not making things happen, terrified me much more than any of the details of actually doing it. Have not looked back since!
Reminds me of something Terry Gilliam said... "Usually you spot how societies work by what they glorify: it's usually the thing they're deficient in."
The fact is startups and small businesses have always been a small fraction of the economy both by employment and contribution to GDP. When I say "always" I actually mean the modern economy of the last 75 years at least. I was very surprised when I learned this but the data go back at least to the end of WWII, which is far back as I looked. Pre-depression there was still a lot of small / disorganized (unincorporated) business and a lot of agricultural employment.
The large companies are the large employers; next are "small businesses" which are franchises (e.g. a lot of people are employed selling MacDonalds hamburgers who aren't technically employees of the MacDonalds company).
There article even points out that new businesses account for only a tiny percentage of jobs; they compare company creation to the 1980s but don't account for company failure. And how many of those companies grew significantly? The vast majority of operating companies formed in the US, and I suspect most countries, are small businesses (shops, restaurants etc).
My understanding is most of these are retail (think mom-and-pop shops), construction, and professional services (think solo-practicing doctors, lawyers, accountants, etc).
The fact that I can join Google instead of incorporating Muzz's Software Consulting Services should be a good thing, not a bad thing.
Of course Google, Apple, GE, Exxon (Standard Oil) and Boeing were all startups at some point, so without startups you don't have an economy, but the breakout in terms of affecting employment is in the large companies. So yes, google hiring is good for you and is believed by many to be good for the economy in general.
BigCo has billions in profit from existing products. They can't task big risks. What big innovations have the BigCos done in the last X years?
Startups do crazy stuff. Many fail. Some succeed. End result: Innovation
They're in a better position to take big bets than anyone else - Google X, Microsoft Research, Facebook's FAIR and others. If they have the right people in house (or can get them), they can take big swings.
Conversely, a startup has nothing to lose. Early-stage investors know they're taking a moonshot, and they expect only a few of their bets to succeed, so they will encourage the team to swing hard. That's how startups can disrupt established markets with big players: they have less to lose, and don't need to earn buy-in of a large existing company. They can build what they need as they go.
This is also why most acquisitions fail. The team of the acquired company can have difficulty navigating the existing company culture. Often, they're tasked with being a "change agent" only to be identified as a threat by the acquiring company's "immune system" (its existing power structure).
In particular, they can't destroy markets, by creating products that creates the same wealth while capturing a small fraction of the revenue.
a bunch of destined to fail startups employing a handful of people (paid via owernship and future options) hardly contributes to the economy.
Sad part is that as far as I could read economies promoting this kind of behavior are the only ones doing well, yet even here(in the US) it seems things have worked out at best "average" for a vast majority of people. The ones that actually tried to do better for everyone failed spectacularly(read collectivism and socialism).
I always wondered why truly bettering ones self in every way(health, furthering ones own knowledge, exploration, helping others) are goals available only to the select few and not made available to more people more easily? Why are economic efforts geared towards these dwarf in front of more consumerist ones? Why do economics and behavior align in a way that makes it impossible to do better than a narrow predefined narrative someone set for me(or go through immense pain to achieve the one I want)?
For example, I was looking at the simple task of affording a house with wife and kids and the only narrative available to have all this are "Zipcode", "School Districts" and "Zoning laws" which puts me in debt for life to get a decent thing choice for those options.
Why do smaller economies seem to do better than larger ones(like in europe). It always seems to me that the bigger the group of people that try to align towards a common goal(be it insurance premiums or world peace)
the harder it becomes. Why is this so?
And yet, in the end, by and far large my experience of living in 3 vastly varied countries in the last 20 or so years still makes US a better place to be. But things could be a bit easier/simple https://www.youtube.com/watch?v=fJRcDHKrSqw
You must either bear the productivity hit of a pure virtual workplace or you must comply to the nearly arbitrary success formulas of VCs.
All of this is intuitive, and I have no hard data to back up my theory, so I would love for someone with much more econometric experience than I to prove/disprove this thesis.
Thesis: The global economy and US economy in particular is going through a radical productivity growth spurt and shift that is not currently being measured properly.
This article is the perfect example of this. You mean to tell me that during a period where there has been an explosion of independent contractors of many different types, we have seen "Startups Weighing on US Economic Growth"? Surely that can't be true and fully reflective of the reality.
There are two aspects to this. There is direct job growth within startups (so Employee headcount) and there is the issue of what is a 'new company'.
Direct Job Growth.
It is hard to argue that the average startup isn't much more productive today than it was 10 years ago, much less 20 years ago. Particularly tech startups. For tech startups it's most glaring, because you have things like AWS, Heroku & the App Stores that allow you to deploy a relatively easily scalable, product that can reach hundreds of thousands/millions of users/customers as a team of 1 - 5.
No longer do you NEED someone just to manage 1 server, or even add additional server capacity and deal with Colocation-related issues and all of that stuff.
You also no longer need to pay huge licensing fees for development software platforms and developer tools. So the barrier to entry to shipping has dropped to 0, basically.
So whenever a startup raises a nominal amount of money, it can go into much more high-value jobs (like customer acquisition and customer support) for which there isn't always a direct correlation between each incremental dollar in revenue earned with the number of people you hire to support that revenue. In some cases there is, but in many cases there isn't. Or rather, the up scale hiring process is horizontal rather than vertical. Each customer support specialist can handle more support tickets today than they used to 20 years ago, for much cheaper. Aka, the support systems that multi-national companies have always used are now available for much cheaper and often much better to startups at $50/employee in many cases.
When you think about the various aspects within a growing tech startup, you can see this same principle across all disciplines (even including HR and Employee benefits via services like Zenefits and its competitors). So the productivity that can be bought with each marginal dollar invested in a nascent startup is so much greater as a result of these highly, specialized and in many cases very economical services that can be leveraged from third-party providers, than had been the case 20 years ago....yet these articles and current econometric models would have us believe that productivity growth has flatlined. Really?
What is a 'new company'?
While there may be significantly less direct job-growth (as a result of the issues I highlighted above), there has been an explosion in the number (and types) of marketplaces that have sprung up that allow customers/users to be independent contractors. Not just typical web dev/writing/etc. But your excess space (AirBnB and all its clones), your excess vehicle (Uber, Lyft and all clones and derivatives), your excess time (Instacart, TaskRabbit, Mechanical Turk, etc.), and any other service that has sprung up that allows random people to do random gigs from a marketplace of gigs of different kinds.
So yes, the Ubers of the world no longer add significant employees to their payroll to service increasing revenue as a part of operations, but by creating marketplaces where random people can earn a living, doing things they previously never did (or even considered doing), surely has contributed significantly to economic growth in ways that aren't currently being measured properly.
Those people likely haven't registered legal entities, they probably just have a bank account, so they won't show up in "new company" data. But I bet if there was a way to measure those non-registered, independent contractors across all of these problems and you contrast that figure with the same category 20 years ago, you would get a much different picture of the US economy and productivity growth.
I could be wrong with all of this, but every time I read one of these articles....that's what jumps out at me. The disconnect between what is being measured and reported in articles like these, and all the products/services we see being launched on TechCrunch, Product Hunt and HN that significantly improve the average person's earning power by both being able to sell said product/service or sign up to be a participant in that marketplace, has always been jarring.
Let me know if this makes sense to anyone and if I am missing anything.
I would love to crystalize this thesis and ideas some more, to do a full write-up in a blog post so please poke as many holes in this as you can.
Productivity is dropping because we can't just ride on the improvements in transistors any more. We are going to have to figure out ways to arrange society that will allow us to maintain output while reducing the drain on resources of the financial and marketing sectors themselves. They've become so massive that squeezing them could provide productivity gains for decades.
The only way that Ubers are more productive than taxis is due to the economies of scale created by monopoly. A person working multiple jobs through multiple marketplaces is far less efficient that someone working one job. If the metaphor is a multitasking operating system, you're disregarding the overhead of context switching. We're in a nadir of productivity.
ML is the one I'm most excited about at the moment.
1. We are currently inside the second longest bull market in US history. Markets are cyclical. We are far more likely to be toward the end of the bull market than the beginning.
2. Interest rates have begun to normalize, albeit very slowly.
3. Source rock fracturing and enhanced oil recovery has bought us another 20 years of bumpy plateau. We are squandering this by employing civilization's best minds building Tinder, Uber, Snapchat, etc. The last "great inventions" were the microprocessor and the lithium polymer battery. Every disruption in the last forty years has been variations of ever more hedonistic consumerist enablement, while the clock continues to tick on future energy supply.
- business is good due to lowered competition (market consolidation)
- cheap/free debt can be used for various forms of financial engineering (stock buybacks, etc), making EPS look good
EDIT: Judging from this site it seems they plan to reduce deficit spending to about 500bln a year. So yes, I expect a recession if that turns out true. http://www.usgovernmentspending.com/federal_deficit_chart.ht...
You can see here that every time there was a slowdown in deficit spending or a surplus there was a recession or depression. Notice that before the great depression, there was a long period of surplus and following surplus during Clinton years there was huge issues.
Let's hope Hillary does not repeat Bill's mistake.
I don't deny that ML is useful (I work in the field of statistical inference), but I am bothered by the characterization of "ML" as a great invention.
First off, "ML" is not really new per se; it has gone through iterations over a long time frame. Pattern recognition (via discriminant analysis, a method that is still popular in a variety of circles) was introduced in 1936. One could argue that there were statistical works addressing this at even earlier time frames - see e.g "The History of Statistics" by Stigler that focuses on linear regression, a method with at least 250 years of history. Popular methods like nearest neighbor date to at least the 1970's. Even the "revolutionary" deep learning paradigm had most of its key architectural ingredients mapped out by the 1980's or early 1990's - the main changes have been the scale at which one can operate these algorithms, tweaks of algorithms, etc due to improvements in hardware. This in turn has fed a bunch of further developments, the stage we are at right now.
Essentially, what has happened is that "ML" has appropriated a variety of disciplines and techniques under its umbrella, many of which have existed for a long time.
As for why concretely (i.e from an economic perspective) I lack the same level of enthusiasm as many others here, I have the following test: Amazon (or for that matter Google or your favorite search engine) has rarely been able to recommend me a nontrivial product (nontrivial in the sense of transaction magnitude) that I liked within the first few links. The best nontrivial products that I have acquired have always needed meticulous searching through a variety of diverse sources on the web (reddit, youtube, random blog posts/discussion forums including hn, etc), conversations with people, etc.
Same goes for movie recommendations, and miscellaneous other things.
This was true 7 years back, it is still true today for me.
This suggests either that these problems are genuinely hard (e.g at an NP-complete fundamental level), or that we still don't know how to come up with good recommendation systems, or that companies have failed to incorporate/package techniques into a good product, or that I am just an outlier with respect to recommendation engines.
Additionally on a theoretical level there are new things being discovered every day it seems. I mean, batch normalization wasn't even discovered until 2015.
There's a long road ahead, but I believe it will be filled with better and better inventions.
Why not highlight it for known domains like wsj.com and others
Why don't people just stop submitting WSJ articles?
Ehrm, huh? That is your proposed solution?
Just a SWAG: The articles are interesting. This claim can be backed up by the fact that WSJ articles show up on the front page fairly frequently.
I don't have a solution I'm just saying it's WSJ's fault here, not HN.
Many news sites give special favours to search traffic.