Everybody’s Working for the…Health Insurance

Published by Taylor on December 5, 2008 in Health. Comments
There are plenty of compelling anecdotes that make a UK-style national health plan sound like an enormous improvement over our current system.  Just as there are many valid criticisms of the British and Canadian systems.  I’ll happily outsource my health wonkery to Ezra Klein and others who are far more intelligent on the subject than I am.  But reading this “dissent of the day” on Andrew Sullivan’s blog (an ex-pat Brit who is a harsh critic of the UK’s system), I’m struck by how potentially stifling it is that our health insurance is so often and so precariously linked to our employer (emphasis mine):

I have lived and worked in the US and the UK. In the summer of 1999, I disappointed a work client by deciding against a planned move from the UK to the US.  I had my visa in place, I had scoped out housing and childcare.  In the end, I didn’t think it was worth the trouble of moving my family, with a young son and a baby daughter, thousands of miles away from friends and relatives.

A few months later, my 4-year-old son was diagnosed with leukemia.

Had I moved to Chicago, the three-year chemotherapy nightmare would have been accentuated by constant worries about insurance.  My job was a good one; I would have been covered as long as I kept working.  But the company was an IT startup, and in fact did downsize after a while. Like to bet your kid’s health on staying in work? Staying in the UK I found other clients, cut my hours right back, and intermittently stopped working altogether, to care for my family. He got three years of world-class treatment, without any question of payment.  Many years later, he continues to be very well, and I continue to believe that we dodged a bullet by staying in the UK.

I think Jarred and I (like many of you reading this blog) believe fervently in the power of start-up businesses and ventures to creatively tackle problems and introduce exciting innovations into our culture.  But the possibility of starting an enterprise from scratch–or joining a budding start-up–is severely limited for individuals who are responsible for providing health insurance for children or spouses, not to mention folks who depend on health insurance to cover consistent medical services or who develop a condition that could make it hard to switch insurers.  

This is a health care issue to be sure.  But it’s also an  issue of economic health: the more barriers we place in front of bright people with creative ideas, the less likely it becomes that any of us will benefit from that great idea.  How many brilliant engineers, scientists, thinkers, designers, etc face the same dilemma captured by the quoted passage above and forego riskier (and potentially more important) endeavors in favor of steady employment with the guarantee of stable health insurance?  

If you enjoyed this post, you might also like:

- "Social Entrepreneurship at Council on Foundations", posted by Taylor on May 5, 2008

- "Pay As You Drive", posted by Taylor on May 2, 2008

- "A Note To Our Readers", posted by Taylor on June 2, 2008

- "Philanthropy Online: Kiva", posted by Taylor on January 17, 2008

- "Why Social Investing May Not Be Such A Good Idea", posted by a Guest on January 7, 2009

  • Jared McKiernan
    When you say the current healthcare model is biased against career flexibility, I am intrigued as to what you could mean. With HIPAA, anyone who has worked for a reasonable period of time can maintain their level of coverage via self-payments until they have a new job and qualify for this employer's coverage. Yes, if you are constantly switching jobs, with constantly being every year or so, you will be without the employer benefits for some of the time. However, you can always qualify for the state CHIP program if your coverage runs out. Every state has this. Obvioualy the programs are a major drain on tax dollars, but essentially they ensure that NO person suddenly "loses" coverage as you describe due to a loss of employment. They may pay a bit more, but really the CHIP coverage is not prohibitively expensive (except to the states). The real problem is much more complicated, and something that will certainly not be covered in the myriad of NY Times propaganda articles revealing very surface-level gripes with the nature and quality of health coverage. My simplest explanation of the #1 issue facing the US in healthcare reform is as follows: people have no idea what is effective health care. We need incentives that MAKE US PAY. As it stands, there are millions of people taking Lipitor, at a very high financial cost for little benefit (% of harm may even outweigh any statistically questionable benefit over other, much cheaper, meds). The fact is, placebo effects can explain a great deal of the "effectiveness" observed in many medical treatments; double-blind controlled studies are shockingly thin in their support of all but the most obviously necessary medical treatments. As the AMA is clearly on the side of "More Medcine!" and rejecting evidence-based medicine to keep its practicioners free to make whatever arbitrary call they feel on that particular day, I don't expect this to change any time soon. I've been reading some stuff by Robin Hanson on www.overcomingbias.com which has led me to begin questioning our course of action on health care policy. We feel like we deserve these treatments, even when they don't help much if any, and this adds up to make the US utiliize almost DOUBLE the healthcare per capita of any other first-world country. Market or national system is moot- we just need to promote science instead of the Almighty Drug Lobby + AMA which are suspect at best. This is a short post and hopefully makes some sense and you understand my point here, however I can explain further as I get more time if there is any interest (and hopefully provide more data to back up my claims for the inevitable skepticism most have upon hearing this viewpoint). Anyways, great blog guys- keep up the quality posts!
    Jared
  • James, its an angle I wasn't thinking about and I think you're right on. I'm glad the benefits in the armed services are so desirable (despite the horror stories we hear too often about wounded vets not receiving the care they deserve) that they would serve as an incentive, but that incentive does limit the mobility of talented and creative soldiers who have latent aspirations beyond the military.
  • James
    I have an anecdotal opinion. I'm in the Army. I've come across several bright people who could, I believe, accomplish great things in their lives and the lives of others. Will they leave the Army? Absolutely not. The benefits outweigh the risks of leaving. Does anyone think it's a coincidence the Army is exceeded recruiting quotas while there happens to be an economical recession? Read this:
    http://www.ellwoodcityledger.com/site/news.cfm?...

    I know it's not exactly what you're talking about, but it is related.
  • Taylor
    NY Times article this morning on the number of people (and spouses and children) left without health insurance when unemployment rises:

    http://mobile.nytimes.com/article?a=267106&...
  • You presume a lot of points here that I'M NOT MAKING. For instance, I've never claimed that:

    a) the US is really lagging in start-up companies or should really catch up with country X, Y, or Z in terms of entrepreneurship

    b) nationalized health insurance is the only--or even the most important--step to encouraging more start-up and small businesses

    c) a nationalized health plan is even the answer.

    As I said, health is NOT my issue. There are fortunately a lot of smart people who are working on this issue, and a lot of good arguments for and against a nationalized plan. I EXPLICITLY acknowledged that and I'm not advocating either side. Here's the ONLY point I'm making (it's a short post...dangerous I guess since you managed to put twice as many words in my mouth):

    It's a limiting, and I would argue uncomfortable, thing that (for a large number of us) our health insurance is intimately linked to our employer. Does it stop everyone who wants to start a business from starting one? OBVIOUSLY not. But could it be a factor preventing creative and talented individuals from freely pursuing their ideas? Absolutely. I'm an example: after experiencing truly excellent health insurance under my employer, I'm now more concerned than ever about paying for that level of care without working for a larger organization that would cover some or all of the costs. Start-up businesses face an enormous number of risks, and some of those risks are necessary and even healthy (you don't want just anyone starting a company without consequences for failure). But, and I think we agree on this Eric, I want as many good start-ups as possible. And I think the current health insurance system is biased against career flexibility. When people face enormous trade-offs that could possibly impact their health or the health of their children, simply by changing jobs/careers, you're inevitably going to lose people who would otherwise make that change.

    I don't have the answer, and AGAIN I'm not arguing for a nationalized system. I'm just making the observation that dependence on employers for affordable health insurance seems like a bad idea if we want to inspire creativity, opportunism, innovation, and career flexibility.
  • Eric
    Are you implying that if we had some kind of a nationalized health care system or a health care backup system that more people would be free to create start-up companies? Not to be a wet blanket but the US has more technology and biotechnology start-ups than any country in the world. (I had to add tech and biotech to differentiate from normal start-ups which would give China the edge by far!)

    Look at the socialized societies of Europe. Everyone has free health care provided by the government. Does this mean that their citizens, freed from the burdens of health care, go and found new start-ups? Not by a long shot. The entire European market for start-ups and venture-backed companies is the size of a medium venture market here in the US (maybe New York or Austin). Now that doesn't mean in terms of money. In terms of pure money invested its much closer. The problem? Not enough companies. European venture capital firms end up over-funding the companies they have in Europe since there aren't enough start-ups to go around! That creates a lot of other problems that I won't go into.

    While I completely agree that something has to be done about health care in the US it's my opinion that the creation of such nationalized systems are not the answer. It's certainly not the answer to more start-ups. More start-ups would be encouraged by freed up capital in terms of both credit and investment, a larger SBA with more principled investment guidelines and opportunities for the creation of third-party invested SBA funds and finally curtailing pork in our federal budget which could ultimately allow us to lower taxes on small businesses and their owners (the very people who end up taking the chance on the business in the first place).

    As for world class care in Europe and other nationalized system? While I hate to bring emotional arguments into things, I have someone very close to me whose cousin is dying because the nationalized health care system gave up on her before they even tried to fight her cancer. This is a 27 year old dying because a government made a health care CHOICE to not allow her the care she needed to give her a fighting chance. She had to travel to the United States for that kind of care. World class care is not world class if the government makes the decisions about whether you can access it.

    Now the argument might be made that people can't access that care here in the US but in many ways, we actually have a nationalized health care system. If you go into any public or national (non-private) university hospital right now you will be cared for, no questions asked. You will then be discharged with a bill. It is then your choice whether to pay that bill or not. If you do not pay your bill, eventually the hospital (and in essence the community around you) will pick up the tab. Well actually the hospital and doctors will pick up most of the tab first but then it goes to the community. Then, voila! Your health care is officially nationalized!

    Health care is critically important in this country and we need to take it very seriously. However, the problems we face need creative solutions that will not put private health care decisions into the hands of bureaucrats or a federal, state, or local budget. Maybe a creative start-up can help us out before it's too late.
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