Comment by ljoshua | Hacker News Reader

Comment by ljoshua | Hacker News Reader

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Insurance premium increases this year have seriously made me consider whether it's worth it to continue running co-founder with my startup, or whether I should just jump back into "normal" employment. I'd love to continue growing my company to the point where we're hiring enough people to qualify for group insurance or where a PEO makes sense, but we're just not there yet and we want to continue to bootstrap it.

I am probably more familiar with insurance than most, having done detailed research in the arena and knowing pros in the industry. My premiums this year increased by only 40%, on top of the 65% from last year's increase; a pleasant surprise. I have a 25 sheet Excel doc that models out my family's expected healthcare costs for the year to compare individual plans. If I were to stay with my current plan (which I won't) it would cost me well over $32,000 in total next year. I've spent many hours trying to figure out what the best financial path forward is, and I still have some huge question marks. (Ever tried to get coverage information for particular CPT codes from an insurer? Ha, good luck!)

Unfortunately, a lot of the cost comes down to the demographics of the individual market, and I don't know much of what can be done about that. I don't fault the actuaries at the insurance cos for doing their job, and it's true that despite the crazy premiums and poor coverage the insurance cos are still bleeding money in the individual markets. Having also lived in countries with single-payer systems I don't believe that is the solution either. But something's got to give or entrepreneurs just won't be able to afford being entrepreneurs anymore. (And the situation will just get worse for non-entrepreneurs who don't have access to group coverage).

How is the demographics so bad for self-employed people? I would assume the group is roughly the same as those who work for other business, with some bias towards being more practical.

Anyway the solution is the same reason my grandmother (a retired teacher) has very cheap home insurance: her union had their own and they were not allowed to make a profit.

What the US need is an association of small independent business owners, who can do the same.

Self-employed people are in the same demographic as other individuals without any access to group insurance, such as those working lower-end, lower-paying jobs. As a matter of sheer statistics, a larger proportion of this population ends up sicker and incurs greater medical expenses.

Something similar to what your grandmother had or other unions is a PEO, or professional employer organization. It's a collection of small businesses (usually) that band together to get access to services otherwise only available to larger groups. It's a little interesting because technically you become an employee of the PEO as well as your own company, and there are certainly costs associated with it, but it's in the same vein as union dues, for example. Just not as clear cut and not required.

Fixing the demographics is pretty easy. Kill the group market.

Of course easy is different than politically feasible.

There are actually very good reasons for keeping the group market. For example, many larger companies will be what is called "self-funded," meaning that they are actually fronting a large part of the healthcare costs for their employees, beyond just the premiums. This is a risk-sharing strategy, administered by the insurance companies, in exchange for lower overall costs to the company. But it has to be done on a per-company basis to optimize it.

Killing the group market could create certain efficiencies, but it would lose many others. And like you said, that is politically infeasible.

Other options, like looking at cross-state competition and capping certain medical expenses are likely better possibilities.

Right, the point of killing the group market would be that everyone has to risk share with everyone else. No sectioning yourself off to save the moneys. Consider that you identified the different demographics of the individual market as a problem...

I expect the only impact of cross state competition would be a race to shitty insurance in the state with the worst regulation.

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