Health-insurance stagnation

America’s health care system – or lack of one – leads to a stifling of economic innovation and mobility. Consider:

* Daniel Taghioff argues that people are more likely to risk starting new enterprises – leading to economic growth – in countries that have health safety nets.

Turning to entrepreneurialism – would you rather risk all to start a new business in a place like the US where if you lose everything you may end up, literally, with nothing, no health-care, no decent schooling for your kids and so on? Or would you choose a society where, if all else fails, the state (or strong social networks) will take care of you? . . . The list of countries with the most new businesses per capita is full of small to medium sized countries with strong social safety nets, or small Asian countries with very high levels of social cohesion.

* I know I didn’t quit my job until I had new health care insurance lined up, for without an employer, I wouldn’t have gotten any (and in the interim had to pay $24,000 per year in COBRA). How many people are sticking with jobs, unhappily and thus probably unproductively, just because of insurance handcuffs? What if they were freed? It would be better for them and their employers.

* General Motors was brought down by more than its its health insurance obligations. Nonetheless, those obligations weighed heavily on the company as they do on many other companies with long legacies and large staffs.

* I was at a WEF event yesterday at which one of the wise counsels pointed to the exacerbation of the health-care crisis that is coming with so many Americans unemployed. This, I think, will force the political issue.

Rather than spending billions to bail out and now even buy crumbling legacy industries and crooked banks, how much more value would universal health insurance give to the economy?

What if, instead of bailing out the past and filling potholes, the government assured universal broadband access? What would that do to spur innovation and entrepreneurship and begin to reform education, which, in turn, would spur innovation? What if education were reformed to emphasis innovation over test-taking? What if investment in new companies were a high priority of the tax code?

We are not thinking strategically enough about these issues in the political debate. We complain about companies thinking short-term but so does the nation.

  • http://www.baristanet.com Debbie Galant

    I agree with you 100%. Being married to a FT worker with health insurance is the only reason I could afford to be an entrepreneur. Maybe that’s next. Like those people who get married for citizenship: fake marriages just for the health insurance.

  • http://robertdfeinman.com/society robertdfeinman

    For all the talk about entrepreneurship, big business doesn’t relish the competition. Making barriers to entry higher helps maintain the shared monopolies that exist in most industries.

    Even traditional mom and pop functions like hair cutting and the corner cafe have now become franchise operations with the “owners” little more that captives of the parent corporation.

    Health care is the same, big firms can offer it as a perk that smaller ones can’t. Most of the successful startups over the past few decades (Google, Sun and the various internet firms) were started by students or recent students who could gamble on no health care and no income. Mature people with families don’t have the same luxury.

    The conservative think tanks talk a good talk, but the actions of their corporate backers belie their intentions.

  • Constant

    I discern two possible points you are making:

    a) Health care is tied to employment.

    b) Health care is expensive.

    The answer to (a) is that health care should not be tied to employment.

    The answer to (b) is that a lot of things are expensive. Rent is expensive, for example. Should housing be nationalized?

    • Jimmy

      So, if health insurance is not tied to employment and we don’t offer some nationalized version what’s the solution? If employers stopped offering health insurance productivity would fall and the medical care system in this country would implode. If we don’t offer some nationalized option what’s the solution?

      Whatever people are afraid — socialism, big government, whatever — having a national option for health insurance offers greater benefits to the country as a whole than it does doing nothing.

    • http://www.buzzmachine.com Jeff Jarvis

      Housing is a fixed cost one can manage. Sickness is a risk one cannot (apart from smoking or being fat, which is a legitimate part of the discussion, I think).

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  • fpk

    General Motors was brought down by more than its its health insurance obligations. Nonetheless, those obligations weighed heavily on the company as they do on many other companies with long legacies and large staffs.

    Why do you think this problem would go away when you nationalize the whole thing. It just would be the same on a much larger scale.
    I am from Germany and we have the health reform debate every year because it gets more expansive and buerocratic and the waiting time to see a medical specialist gets longer every year.
    I hear in Sweden were they have a fully nationalized system (in Germany it is still possible to insure yourself through a private insurer) its even worse.

    There must be another way, I hope.

  • http://Dsafeer.blogspot.com David Safeer

    After housing, health insurance is the largest coat that my family and I face. As an entrepreneur, health insurance was difficult to obtain. My family is healthy with no chronic diseases and we were still turned down by insurance companies that didn’t like our risk profile. We are non- smokers and do not drink alcohol.

    I do not welcome more intrusion into out lives from government, but opening healthcare to join a non-employer risk pool would go a long way to being able to get health care at all.

  • http://www.inowweb.com ecommerce development guy

    There are certain points that i disagree with you – Health care is tied to employment and Health care is expensive. As the case is not such

  • http://www.DyspepsiaGeneration.com Tim of Angle

    So we ought to depend for our health care on the same people who provide “free” public education? I think not.

  • http://robertdfeinman.com/society robertdfeinman

    Somehow the fact that we have “socialized” medicine in this country (Medicare) and that it works relatively well gets ignored by those shilling for the insurance industry.

    From a recent survey:

    “Medicare beneficiaries are more satisfied with their insurance coverage. Only 8 percent of elderly Medicare beneficiaries rated their insurance “fair or poor,” in contrast with 18 percent of individuals with employer-based insurance. Thirty-two percent of Medicare beneficiaries had at least one negative insurance experience, compared with 44 percent of those covered by an employer plan.”

    Medicare participants get to go to any doctor they want, any hospital and the doctor and patient generally determine the course of treatment, not the “government”. The government intervenes in the payment structure, not the treatment decisions. That is, they will pay at defined rates for specified services.

    This is to encourage people to use effective treatments. The anecdotes about someone near death who is refused some totally unproven treatment that “only” costs $500,000 are not a rational basis on which to base public policy.

    If you have private insurance and they refuse to pay what are your options? Why is this any better?

    I know of several cases of successful people (one a physician) who got extremely ill with cancer, lost job, lost insurance, used up savings and was forced on to Medcaid. Is this the route that those pushing employer-based policies like? In that case what they are saying is that the expensive cases will be shoved onto the public anyway. Talk about cherry-picking your customers…

    • Andy Freeman

      > Somehow the fact that we have “socialized” medicine in this country (Medicare) and that it works relatively well gets ignored by those shilling for the insurance industry.

      It’s not ignored at all. It just doesn’t support the argument.

      Federal, state and local govts provide roughly half of the healthcare in the US today. (This half includes employees, the VA and so on.) They do so spending the same amount of money that the private system uses to cover the other half.

      Universal healthcare advocates insist that the US govt will do better and cheaper healthcare than it actually does. Notice the problem.

      Here’s my proposal. Fix US govt healthcare so it produces the promised results. Make it 25% more effective at 25% less money.

      Experiment all you want on govt employees and dependents. When you get it right, come talk to the rest of us.

      • James Thomson

        > It’s not ignored at all. It just doesn’t support the argument.

        I don’t see where you have made a counter-argument.

        > Universal healthcare advocates insist that the US govt will do better and cheaper healthcare than it actually does. Notice the problem.

        No, I don’t notice the problem. You’ve simply restated the same old hyper-conservative dogma with no facts to back it up. Dogma always seems self-evident to the dogmatist.

        Please explain what you think is wrong with “universal healthcare” and does your argument also apply to universal education, universal defense, universal sufferage, . . .?

      • Andy Freeman

        > No, I don’t notice the problem. You’ve simply restated the same old hyper-conservative dogma with no facts to back it up.

        Universal healthcare advocates say that US govt healthcare will provide better quality for less money than current US govt healthcare actually does.

        That’s not dogma, that’s just juxtaposing the claims and predictions with the reality.

        I’m perfectly willing to believe that US govt healthcare can be improved. That’s why I think that the universal healthcare advocates should be given free rein to transform the health care provided by federal, state, and local govts as they see fit.

        However, in keeping with their prediction of cheaper and better, after the first two years, their per-person budget gets cut by 5% each year for the next four years. (They’ve been promising > 25% savings, so asking them to produce < 20% savings in six years should be no problem.)

      • Tom Price

        I understand you departed the practice where you had been for many years. Where are you practicing now, as you were listed as my primary care physician.

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  • Joris Joppe

    Linking the health insurance problem to (lack of) broadband access is stretching it a bit far in my opinion. I think the debate should focus more on the rootcause of our increasing health care cost. One thing that must be addressed is the fact that we seem to be more interested in cure than prevention, even though the latter is cheaper. Especially when you think of problems like obesity. Add this to the fact that a nation’s competitive edge is also based on a healthy and educated workforce and the answer seems simple. Make sure they don’t get sick in the first place! I think it’s time to put in a reverse lobby and make companies like Nike do what they do best. Use their marketing force. But this time not just to buy the shoes but also to use them for exercise…. This might just bring us back to broadband after all. Give it for free so that everybody can use NikePlus, get healthier, feel good about it and be more productive in the end!

    • http://www.buzzmachine.com Jeff Jarvis

      The only way I’m linking them is to argue that they are both better investments than bailing out GM

    • Andy Freeman

      > One thing that must be addressed is the fact that we seem to be more interested in cure than prevention, even though the latter is cheaper.

      Nice theory, not borne out in actual experience.

      Yes, it affects quality of life, but expenses, not so much.

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    • James Thomson

      A quick read-through of the comments so far reveals that those who seem to agree that the present American healthcare system is extremely suboptimal and needs to be fixed mostly offer concrete examples and responses supported by facts or at least anecdotes. Those who are on the other side of the argument, i.e., seem to be frightened by any kind of government role and thus seem to want to “stay the course,” have only responded with abstractions and “boogey-man” arguments.

      That seems typical of the state of the argument within the general population. We are divided between those who want to solve the problem and those who just want to get in the way or carp from the sidelines.

  • http://www.familygreenberg.com/index2.php Brian Greenberg

    I agree with the gist of what you’re saying – uncontrolled health care costs are hurting our economy. But I think it’s misleading to suggest that entrepreneurship is fleeing American shores because the health care is so bad.

    Other countries may have larger numbers of new companies, but the truly successful startups (including the companies that “changed the world” – like Google, Amazon, Yahoo, Apple, Microsoft, etc.) all flourished here in the United States.

    So yes – let’s fix healthcare. Absolutely. But when it comes to entrepreneurship, I’m not interested in owning the entire bell curve. I’m fine with dominating the third std dev.

  • Pete

    And don’t forget that Medicare is basically a ponzi scheme that will be broke before the end of the next decade.

  • http://www.youniquesoftlab.pl Projektowanie Stron Internetowych

    There are certain points that i disagree with you – Health care is tied to employment and Health care is expensive. As the case is not such

  • http://parent-rights.blogspot.com/2010/02/ulysses.html Karateka

    Anybody ever read “Hitchhikers Guide to the Galaxy”? Even if you haven’t, google “Vogon” and tell me that they are not running the “health care” system. ;)

    There are communal models for health care, both private and public. One private example that stands out is the FLDS, of the infamous “Great Eldorado Roundup.” They and their predecessors have been practicing communal insurance, both health and otherwise, for ~150 years. It is certainly a data point worth looking at. However, due to religious bigotry, the State of Utah has taken over their land trust, which they have been mismanaging to the tune of millions of dollars per year.

    http://www.truthwillprevail.org/index.php?parentid=1&index=150