What Startups Need to Know about Obamacare | Hacker News Reader

What Startups Need to Know about Obamacare

blog.simplyinsured.com

75 pointsvivekajayshah90 comments

Good grief. I'm from California, and in the past couple of years I've started a couple of companies. We've been successful and now have a handful of full-time employees in addition to the usual assortment of contractors. Reading through this material -- and seeing the level cost and complexity required to sort out one's healthcare situation -- makes me incredibly glad that I emigrated to London to do it.

I'm reasonably sure that Obamacare is in fact an improvement upon the status quo, but it's still an absurd level of overhead to inflict upon either individuals or businesses. It's clearly in society's interests to have a healthy populace. Everybody benefits when the "are you covered?" checklist looks like this:

1.) Are you a human being? [ ] No -- Sorry! [ ] Yes -- Great, you're covered.

And the premium/co-pay policy looks like this:

2.) Can you walk out of here under your own power? [ ] No -- Stick around and we'll see what we can do. [ ] Yes -- Excellent; now put away your wallet and scram.

Honestly the NHS has its problems, but it's saved my life at least once, and made my businesses far easier to get off the ground, and I'd never again live in a country that doesn't have something like it.

Universal pet insurance seems like the sort of thing that Scandinavian nations, or Japan, could explore in the future.

Because pets are just as important as human beings. Or maybe I should say, human beings are no more important than pets?

Because those nations are wealthy enough and have sufficiently expansive social safety nets to accommodate such luxuries.

That's great, but in case you hadn't noticed, it's practically impossible to get a U.K. work visa these days so it's not like any of us here in the U.S. can follow your lead.

> 1.) Are you a human being? [ ] No -- Sorry! [ ] Yes -- Great, you're covered.

Is this actually true? Does the NHS (or any so-called universal government healthcare programs) really cover literally any human?

No. It doesn't necessarily cover illegal immigrants, and may not necessarily cover legal immigrants, or those present on work visas.

This will likely be challenged (along with many other tenets of it) shortly though, as there have been other resident alien cases regarding civil rights (voting, guns) wherein the decisions pretty routinely fell on the side of the alien, whether they were here legally or not.

Full details of who's covered: http://www.adviceguide.org.uk/england/healthcare_e/healthcar...

TLDR: all ordinary UK residents, non-ordinary-residents who've been living legally in the UK for >12 months, EU citizens with EHIC cards, and various other sets of people.

Treatment at A&E (accident & emergency), family planning & HIV tests, and for certain communicable diseases is always free no matter who you are, for practical reasons (no time to ask who you are in A&E before they treat you, no requirement to ask who you are for family planning & HIV tests for confidentiality reasons, and for communicable diseases you want to minimise their spreading).

Emergency treatment is free literally for anybody regardless of length of stay. You have to be able to demonstrate that you are a normal resident in the UK intending to stay for at least 6 months to register with a GP (student / working here is fine). Basically the only thing they care about is that you aren't a health-tourist.

Pretty damn close.

Unfortunately, this is the price we need to pay for living in a plutocracy. Healy insurance companies and brokers add no value to society. However, Obamacare is infinitely better than what we have now because it is almost impossible to get individual insurance for most people over 40 forcing them to stay at their current jobs. Perhaps this will make it easier for people over 40 to take 6 months off and start companies without having to play Russian Roulette with their families.

I'm curious to see how this affects the startup community, especially since I'd imagine cost-wise, this affects the startup community disproportionately (20-40 year olds who fall into the "In many states, premiums are expected to increase by 15-50% for people under 40 years of age" category). Either salaries will have to rise to compensate for that, or startups will have to pay for those higher costs themselves.

The other potential effect is that startups continue to spend the same amount of money - but purchase lower benefit levels e.g., move to $5-10K maximums from $2-3K maximums.

The ACA also sets new maximums on maximum deductibles. My $3000 deductible Aetna plan won't be legal any more; no individual plan can have a deductible above $2500, or so I've read.

Startups and companies with younger employees will (should) early renew in December of this year, extending their current coverage til late 2013, avoiding the price increases in the short term. For the long term, partnering with a good broker and making sure you're on the right insurance plan can wring out some savings to make up for the increases.

Yup, I think that's what we're doing.

I find it strange, though, that the insurance companies are allowing us to renew early and lock in a rate for another year if they're so sure rates would otherwise skyrocket in January.

Well insurance rates have been going up for years and insurance companies really have no idea how things are going to shake up. If they overcharge, they have to return the money anyway because of the Obamacare stipulation on the minimum percentage that must be paid to health care providers.

Heck, the only reason Obamacare passed was because Blue Shield of California announced it was raising rates upwards of 40% which reignited the fight after everyone thought it was over.

You have a low rate in the first place because they've decided there's a low chance they'll have to pay out a lot of money for you. Most likely, your premium is all or nearly all profit.

Better to keep your profitable premiums than to lose you to a cheaper state exchange. It'd only make sense to force you into the newer rate immediately if you had no other option -- but the exchanges are all about giving you more options.

It'll be interesting to see how this plays out. I imagine that a big percentage (maybe majority / plurality) of people jumping into the insurance markets are going to be people who otherwise couldn't get insurance (pre-existing conditions, whatever--high-cost clients, essentially). The only way to balance the books is to make the healthy people pay more. I expect the young-and-healthy category to pay even more than the 15-50% extra in the article. It's going to be ugly, from a dollar perspective.

About 17% of the US workforce is officially "underemployed"; that's a very large number. I would think a large chunk of that are young, healthy people who work one or more part-time jobs without benefits. They're to be forced into the health insurance marketplace as well, with government assistance if they can't afford it -- essentially, there will be a tax dollar transfer to insurers that could absorb much of the extra cost of also insuring people with pre-existing conditions. It really is hard to predict how it will play out.

The insurance companies selling through the exchange are the same insurance companies who'd be "losing you", so I don't think that's it. Since businesses aren't subject to being excluded for pre-existing conditions, group plans already have that risk factor built into their pricing. Difference being they discriminate more based on age (55-65 year olds pay 4-5X what a 25 year old pays) than they will be allowed to in January (I think the cap is 3x).

> I find it strange, though, that the insurance companies are allowing us to renew early and lock in a rate for another year if they're so sure rates would otherwise skyrocket in January.

If the coverage is starting early in December, plans may be working around some of the provisions limited to specific to plan years by starting what would otherwise be 2014 plans in December 2013.

It's the same coverage we already have. The insurance company offered to let us renew early, at a moderately higher price, rather than wait for it to renew early next year when they say it will be much, much higher.

In GP, I meant coverage under the new contract, not similar coverage under an existing contract.

> The insurance company offered to let us renew early, at a moderately higher price, rather than wait for it to renew early next year when they say it will be much, much higher.

"Renew now to avoid a big upcoming price increase" is a frequently used sales pitch, but there is no reason for a rational profit-maximizing firm to offer it unless there is something else at work.

Depends mainly on your health history. Startup founders are generally young and male, but not all are free of preexisting conditions. For those who had elevated rates due to health histories previously, the new rates will likely be lower. For those with no negative health history, the rates will likely be higher. The new rates will be roughly a weighted average of the old ones, modulo noise. There are a number of people in both categories on HN, so it would seem to depend on the specific startup.

This felt more like marketing material than objective information for startups.

It is (SimplyInsured is an insurance broker) but the objective information is short, accurate, and to the point. Discussion of the changes in health insurance markets from the ACA has been sidelined by the crisis in Syria, so some timely information is good to have even if it's from a commercial source.

I hate the fact that I am being forced to do business with companies I don't trust (insurance companies) or face being penalized with fines.

Unless you have enough liquid cash to self-insure against high medical costs, then you're just hating the fact that you can't freeload on the rest of us who pay for insurance.

I think he wants better / more insurance options and for government policy to not favor incumbent firms / thinking.

This. We need to focus on why the costs are so high, not how to pay for such high costs. I shouldn't NEED insurance. It should be an option if I'd like to spread out financial risk.

The costs are so high because certain treatments are expensive; they are expensive because it took very large investments to create them; and it took such large investments because it's extremely difficult to treat many diseases and injuries.

I'm in total agreement that standard, "old" services like a physical or strep test or penicillin should be paid out of pocket and subject to market forces, just like food and clothing are (two other "life-critical" industries).

But it's a very big step from there to not needing health insurance at all. If you get hit by a car doing 30mph and survive, there is no getting around the fact that your treatment is going to be very expensive. IMO that exactly what insurance should be for.

Perhaps in some cases. But $90 for a bag of saline seems to signify a pretty broken pricing model.

Most things you're talking about are either end-of-life care type of stuff like cancer, or something rare like Cystic Fibrosis.

- Typical procedures used for common infections, broken bones, etc. don't require anything much that wasn't around 50 years ago.

- You might say: CT scanners, MRIs, etc, but the reason these are expensive is market structure (i.e. someone will pay for it...), not a fundamental engineering reason - i.e. the MRI isn't required to be made form gold.

Also note that this is one of the few (only?) industries where the same device w/ same features increases in price over time - because of monopolistic shit from patents, FDA barriers, etc.

For sure - this is my problem with Obamacare. It's reinforcing the cost structure, not trying to change it.

That would be a fairer dig if:

* he were free to actually purchase catastrophic health care coverage instead of the bureaucratic "minimum" politically-acceptable coverage

* he was free to pay for said insurance at a rate approximating his actual risk, i.e. he's actually buying insurance, not something that's insurance plus a government-mandated wealth-transfer mechanism from the young and healthy to the elderly and infirm

But even so, who's to say that people shouldn't be allowed to take risks with their own life and limb? Meh.

> But even so, who's to say that people shouldn't be allowed to take risks with their own life and limb? Meh.

That would be fair if he signed a waiver that stated he denied any care if they drop him off in the emergency room. If he's in an accident and unconscious, they are going to take him to the hospital where he'll be treating insurance or not. Without insurance that cost will more likely than not just be spread around.

... and thank you for demonstrating exactly who's-to-say.

Just because I don't have insurance doesn't mean I can't/won't pay for emergency care.

Then the government should require you to post a bond for a reasonable amount to cover that eventuality. I don't think most people have over 100k sitting around.

Many young people think it isn't a big deal, they'll just pay if something happens. Except when it does and now they owe over 100k in bills. Oh, and at the same time they are sick or injured. Now they can't pay, so everyone else does.

Just because _you_ can or can't do something doesn't mean that on aggregate people can or can't. Society must use the situation as a whole. On the whole, many people can't pay and the costs have increased for everyone else.

"wealth-transfer mechanism from the young and healthy to the elderly and infirm"

What do you think insurance is? Everyone pays, only some people actually use it. If you get hit by a bus the day after you get insurance and need $2 million in surgery and therapy, the insurance company pays for that. And now, thanks to Obamacare, they can't just drop you.

And others have addressed the part about risking your own life. In theory, yes, that's fine, except hospitals are legally required to treat everyone regardless of insurance. So the rest of us are paying for it one way or another. This just forces the freeloaders to pay up.

Oh yeah, and it also keeps people from being dumb about not paying for insurance when most of the time it's a good idea, financially.

Right, so, insurance is not a wealth transfer mechanism. It's a risk-pooling mechanism.

We know that driving a car is risky and we could crash, and it could cost us lots of money, but on average the risk is acceptable. Instead of casting our financial fortunes to the fates like that, we pay the average risk (actuaries ho) and a few percent to make it worth the insurers' time, and we have restructured our risk exposure: we are guaranteed a certain financial impact, but it's limited, instead of being unlimited.

BUT IF YOU'RE A CRAZY MANIAC driving your new BMW down the freeway at 120mph as a matter of routine and racking up speeding tickets left and right, you end up paying more, because your behavior is risky. If you're a super-safe driver with a cheap car, you end up paying less; you don't subsidize the maniac's premiums -- not insofar as the insurance company can help it, anyway.

Contrast with Obamacare, where young healthy people end up paying more, in order to subsidize the elderly and others at risk of health conditions. That's the wealth transfer. You can also recognize it because without governmental regulation to that effect, it wouldn't be happening.

What a devastating criticism. You opened my eyes.

Those old people should have paid for the undercoating

If you want to give more money to old people for their healthcare, that is a legitimate aim, and it would be better if we were to talk about it as an aim per se... and maybe get the money by taxing healthcare for young people (which is very regressive and quite painful for many people who are not rich young computer programmers.)

It's almost as if we should tax people proportional to their ability to pay.

A person will be free to purchase plans that consist of catastrophic insurance, plus a small amount of preventative care: http://health.usnews.com/health-news/health-insurance/articl...

For the record I have never left my medical bills unpaid.

That is not fair on several points:

Society as such is the one offering medical care to people who can't pay. You don't get then to blame the individuals who can't pay.

He cannot obtain catastrophic coverage (the only medical coverage that makes sense), thanks to the new rules.

He cannot pay a fair prize for that insurance, as he is forced to subsidize the old people who should have saved up when they were young and healthy.

Also, something I don't see people talk about as much as they should (perhaps because startups are staying smaller these days), but if you have 8-10 employees or more you should be looking at a PEO.

We used Insperity/Administaff, and our healthcare rates went down by 30% and the coverage got dramatically better. Plus, they added all these adjunct benefits that big companies typically offer that few people use, but don't hurt to offer your team - free legal advice, adoption assistance, cheap LTD and life insurance (and a free life insurance policy for everyone), and so on.

They were organizationally harder to deal with than our previous payroll provider, but it was one of the better backoffice decisions we made period.

Having analyzed Trinet plans against readily available group plans, I don't think PEOs are necessarily better in terms of health insurance, though that probably depends on how good your broker is.

I wouldn't be surprised if location, coverage type, etc. mattered quite a bit, and it's possible that in the last few years it's become less appealing.

But I remember having a conversation with a friend-of-a-friend who worked as a health insurance advisor or broker (don't remember which) told me quietly that up to around 250 people, you can generally get much better rates from a PEO than from the provider directly (assuming you negotiate hard), and that she thought more companies should be using PEOs. She also felt that the reasons more companies didn't was having to basically turn over the whole benefits and payroll function to a third-party, and the loss of control therein.

So - again, I'm sure there's variability, and you should look at all your options, but I think PEOs are something that startups should be considering in the mix.

One thing to consider is that even with the lower rates you can get from a PEO, you're paying a setup fee and a monthly administration fee that, for a company of 8-10 people, may not make the lower insurance rates worth it.

Startups innovating in the space like ours, Maxwell Health (http://www.maxwellhealth.com), are able to offer way better tech and valuable services for startups and do all of it for free. We've been able to save money for companies who were currently using your typical PEO.

Not mentioned: You might now be able to hire a much wider variety of people who couldn't come work for you before because of healthcare worries.

That is a really great point. We wanted to make it - but were trying to find a data-backed way of showing it.

Do you know of any studies/reports that show offering healthcare - results in lower hiring costs, more applicants, more qualified people, etc?

Aflac's most recent WorkForces report (we blogged about some key findings a few months ago: http://blog.maxwellhealth.com/post/52789613016/what-do-emplo...) has some good data on this.

I have not, but anecdotaly it's one of my own main concerns for being able to join a startup. If/when health coverage follows the person wherever they may work, it would make moving jobs a lot easier.

  > Will my rates go up?
  > Yes! (~40% increase)

What?! What was the point then? The cost of healthcare in US was already 5-6x of a typical EU nation, and we're looking at additional 30% increase?

WTF!

How do we stop this forced re-distribution of wealth from the general public to healthcare workers and (via government-backed loans) to Wall Street?

The point (or at least one of the points) is that you cannot be permanently trapped without insurance, and thus essentially unable to access the American healthcare system, if you acquire an expensive pre-existing condition, which many people do as they age from being young, healthy people to older, unhealthy people.

Moreover, your premiums may go up, but if your income is low, those premiums will be subsidized.

Merely banning health plans from excluding those with pre-existing conditions doesn't work, as you may know if you've ever had the displeasure of purchasing insurance on the individual market in New York State.

Another 'point' of the law is to decrease the rate of increase of healthcare costs, and preliminary indicators are good: http://www.kaiserhealthnews.org/daily-reports/2013/july/30/h...

There are very few young, healthy, high-income people in the United States buying health insurance on the individual market, and, quite frankly, they're able to take care of themselves.

Thanks for the link, very interesting. But I fail to see how will this help us reduce the healthcare costs by several factors? (where they should be)

"Slowing cost increases" is fantastic but it's too late: the costs are already at 500% of normal and I just don't see how will this be fixed.

An example: a 3-hour stay at the hospital (wrist surgery) was billed to me at $44K which is what insurance company actually paid. It included a few hundred dollars for a can of apple juice.

I am willing to bet your health insurance did not actually pay $44K, but rather the rate they had previously negotiated with an in-network providers for the services rendered.

The high cost of healthcare stems from many systemic factors, all of which are pretty thoroughly screwed up. Tearing the system down and replacing it with something entirely new (perhaps a single-payer system, or a system with single-payer basic insurance) would be a great idea, but reorganizing an industry representing 17.9% of GDP[0] of one of the world's largest economies is a nontrivial undertaking, especially with one of the two major political parties dedicated to preserving the status quo by any means available.

[0]https://en.wikipedia.org/wiki/Health_care_in_the_United_Stat...

That is the point!!!! Because they couldn't fly an outright government takeover, they've set up this system to be an abysmal failure, giving themselves an excuse for the outright government takeover of the healthcare system further down the line. :P

Next question?

> How do we stop this forced re-distribution of wealth

Sounds like your complaint is really about taxes being somehow equivalent to Communism or Slavery.

When I visited that page, Avast gave me a malicious download warning:

hxxp://fekhdkxtnosb.rr.nu/jquery/get.php

Apparently what's loading isn't jQuery?

I like how this article assumes all startups are in California.

We don't assume all startups are in California, we just have the best dataset for CA (since that is where we operate). We look forward to showing analyses like this for other states as information becomes available.

For example - this is a great analysis by Forbes (which we linked to) http://www.forbes.com/special-report/2013/what-will-obamacar... that goes state by state.

Maybe change the title then?

A more reputable data source is here:

http://kaiserfamilyfoundation.files.wordpress.com/2013/09/ea...

Apparently every adult in the US now has to spend $4 extra a day on healthcare.

There wasn't $4 per person of waste in the system?

Alternate hypotheses: 1. There's more waste in the system now. 2. The money is paying for people that weren't being treated before. 3. The money is paying for risk that wasn't being assumed before

Do the bronze plans qualify as "high deductible" plans and let customers use a health savings account?

This does make me curious how much the government subsidizes some of their health care plans. I'm on Tricare Young Adult right now, and switching over to an equivalent health plan would probably double my monthly premiums and add at least $6,000 in deductibles.

For a young, healthy person, is there any reason to spend beyond the basic "bronze" plan?

You might only think you're healthy. You'll be the first to test out the claimed pre-existing conditions benefits of Obamacare.

Why would it be "claimed"?

Currently in most states - small group plans are already "guaranteed issue" - which means that you will get covered, regardless of pre-existing conditions.

We have insured hundreds of customers with pre-existing conditions under California's current guaranteed issue rules . These are the same rules that are going into effect nationwide for individuals.

I can only assume his skepticism is based on the assumption that either companies will find a way around it, through some legal loophole, or the government is not telling people the whole truth about the coverage guarantee. I hope he meant the former.

I meant either. It's all empty promises until someone legally backs us up on either end. Someone gets to be the first test case.

It's "claimed" because the stories of recission are real, and to be expected from an industry that simply makes more profits by cutting costs (due to the inelastic demands of sick people needing health care). This story [1] is from 2009, before passage of ACA/Obamacare.

[1] http://www.dailyfinance.com/2009/09/02/think-youve-got-healt...

The deductible might be an issue for some people. If you don't have a spare $5,000 then you might choose to pay more per month to decrease the risk you have to pay that amount all at once.

Also, make sure to factor in the cost of any prescription drugs you're on.

I was young & healthy.

Then a doc wanted to put a pacemaker in me the next day. He was wondering why I was still alive.

The infected gall bladder and aortic flutter came with no warning too.

I personally agree with the sentiment and I've never regretted having too much insurance.

But in this case wouldn't that scenario likely hit the same out-of-pocket limit that's on the bronze, silver, or gold plans? Or do I not understand how that works?

Why is out-of-pocket even a concern? Health insurance should cover unlikely catastrophic issues costing 5-8 digits, leaving generally "young & healthy" patients to absorb lesser costs in exchange for practically no maintenance costs.

If the bronze/silver/gold plans cover the petty stuff (routine checkups) but hit the wall on something as moderate as a pacemaker (as contrasted with, say, open-heart surgery or cancer chemotherapy), then the plans are royally screwed up. Don't go implementing a health care plan just to find out what's in it.

I'm confused. How do they "hit the wall" if you won't have to pay more than the out-of-pocket limit of $6350 per year but they still have to cover you? Do I not understand what that number means?

It's a pretty straightforward tradeoff: lower premiums = higher cost of care. Bronze plans are not inferior, just priced differently.

If you have hobbies that may result in injury you might upgrade.

If an employer is paying, it's tax deductible to the company and doesn't count as income to you.

The graphic they used shows the Bronze plan is $122 per employee per month.

That's far, far cheaper that I had been lead to believe, from some of the articles written about the subject.

I get prompted for username/pass.

> Enter username and password for http://www.kff.org

Seems to make no mention of spouses and children.

Family plans are literally 2x individual plans - the maximum, deductible, and other limits are just doubled for the family.

For your spouse - you can identify her rate by entering her in as an individual (her quote is her rate).

Currently - our quoting tool: http://www.simplyinsured.com/small-group/first-quote will also let you see the prices for spouses & children on current small group health insurance plans.

~50% of spouses are not female.

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