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Obamacare Could Help Fuel a Tech Start-Up Boom
dcblogs writes "The arrival of Obamacare may make it easier for some employees to quit their full-time jobs to launch tech start-ups, work as a freelance consultant, or pursue some other solo career path. Most tech start-up founders are older and need health insurance. 'The average age of people who create a tech start-up is 39, and not 20-something,' said Bruce Bachenheimer, who heads Pace University's Entrepreneurship Lab. Entrepreneurs are willing to take on risks, but health care is not a manageable risk, he said. 'There is a big difference between mortgaging your house on something you can control, and risking going bankrupt by an illness because of something you can't control,' said Bachenheimer. Donna Harris, the co-founder of the 1776 incubation platform in Washington, believes the healthcare law will encourage more start-ups. 'You have to know that there are millions of Americans who might be fantastic and highly successful entrepreneurs who are not pursuing that path because of how healthcare is structured,' said Harris"
Bachmann said Job Killing Regulations!
If th e US has a civilized Health Care system, I would start my own business much easier. Or join a start up without worrying about health care.
The Kruger Dunning explains most post on
One of the things the haters don't get is how big an implicit tax we pay because we don't have universal health care. Other countries pay far less per person, with far less risk. You may not be thinking about it when you're 20 something and healthy, but in a moment you can lose everything because you're not covered.
I've worked in the medical device start-up world for about 10 years now. The 2.3% tax imposed by Obamacare has really hurt. Because it's a tax on gross, not net, it makes it much harder for small companies to turn a profit. So funding has been drying up.
At least in the US. Because of the way the tax is calculated, imported products have an advantage. So funding is shifting OUS.
That simply doesn't wash. While I certainly want everyone to have coverage and to get the best treatment, the fact is, BY LAW in the United States, no hospital can refuse to provide essential care. I have a friend who had breast cancer, and who went through the entire course of treatment without paying a penny. I have another who suffered kidney failure and went through years of dialysis -- without paying a dime.
The real killer is *being*out*of*work. You're so sick, you can't work, so you have no income. For that, health insurance (whether Obamacare or something else) doesn't do a thing. You need coverage to pay the bills while you're out of work.
THAT'S why people go bankrupt.
Not taking sides either way, I'm just pointing that out. The fact is, also under the law, even if you have assets, as long as you pay the hospital what you can afford (even if it's only $5 a week), they can't do anything to you. If they take you to court, you can tell the judge: I was out of work for a year, I can afford to pay them $25 a month and that's it. The judge will almost always agree.
I've been in court and have watched it happen.
Again: you can make an argument for universal health care. But I just wanted to set the record straight about that.
Cogito, igitur comedam pizza.
I can't begin to imagine how many people I've worked with over the years that have only worked somewhere because of the health benefits. Make the health benefits no longer an issue and you gain better competition in the market for where people can work. Remove the barrier and all of a sudden a lot of places that previously would not have attracted enterprise class talent open up.
The fact that some of these places are starts ups is largely incidental. Think of it this way, something like 40% of fortune 500 companies were started by immigrants. Why? Because they were hardworking and didn't have anything holding them back.
I know I've turned down employment opportunities for a lack of viable health insurance for my family, I have to imagine that I'm far from the only one. What happens when people are no longer held back by this very practical concern and can go for broke like the immigrant entrepreneur?
Ok, I almost need healthcare after trying to read this.
true, but they are specifically target a demographic that has traditionally been held back by needing health care.
Frankly, I suspect its' why large corporations don't get behind universal health care. They can't trap employees. At least that's the only reason I can think of since a good national health care system would save them money, and be consist and predicable in the books.
Obviously there could be another reason and I simple didn't find it.
The Kruger Dunning explains most post on
http://www.businessweek.com/smallbiz/content/dec2010/sb20101210_839038.htm
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Oh, sure. And we had prosperous booms without computers, too. That people succeeded without something isn't evidence that having it won't help them.
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That is a load of bull. Any startup would have to have 50+ employees before being required to offer health care. And then the cost under ACA is much less. Stop spreading your misinformed lies.
Like any other form of tax, Obamacare's net results will be negative in employment
As a truism, that's bullshit. And it's not even entertaining bullshit.
Let's pretend it was taken to it's logical extreme, aka a society with zero taxes. Also known as a society with no roads, no enforced laws, no food inspection, no building codes, etc. You really thing that's a better functioning society with increased employment? Now, obviously a society at the other extreme (100% taxes) is equally dysfunctional. Arguments can be made for lower taxes (and certainly better spent taxes), and arguments can be made for raising taxes in some circumstances (certainly worked in California lately), but to say lower taxes are always better is so stupid it's not even wrong.
If you say, have some disease, and it is cured, and you want health coverage, you are stuck in your present job with it's present health coverage. Change jobs, and ooopsies, it's a preexisting condition. So a friend of my spouse who had breast cancer, is stuck in her job. Because if it recurs, which isn't likely at this point, but possible, she is bankrupt.
And despite all the hate, there is a lit fuse in the present system. People without health care do get treatment for their illnesses and minor issues. They go to the Emergency room. There, they get the most expensive treatment available to people - emergency room care. Before my father passed away last year, he was in the emergency room three times. And it was a little strange. Most of the people there just seemed to have minor problems, like sore throats, colds, sick kids. I'd asked about that, and the eanswer was "it's poor folk with no insurance." But rest assured that it is paid for, by your's and my premiums, and by Government.
The problem is, as insurance costs go up, and people drop off the rolls, the emergency room will become more and more used for more and more people. A real positive feedback loop, Eventually no one except people who can pay for their medical bills out of hand will afford health insurance. Then, unless we are going to force peole to go without medical treatment, we'll have a bizzare form of universal coverage. Not a good idea at all.
Reading the opposition plan, it is some bafflegab about doing the same thing as we are doing now, except for more bafflegab about affordability.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
Healthcare is one major reason I decided to move back to Canada and work in a self employed situation. Here people can work two part time jobs if they want, or start a business and not worry about having to buy into basic health care plans. Many companies do offer supplementary insurance though. Even our own family company is thinking of doing that.
Obviously freedom means different things to different people. Guess at least half the republican party sees things differently.
What exactly do they mean by tech startup? The 40 year old project manager for a software company that leaves to consult with an existing customer base to increase freedom/pay? Or the Elon Musk starting a new billion dollar venture? I guess they're both tech, and they're both startups, but the current industry definition of tech startup only really applies to the latter, while the age of the people being mentioned are the people that go into small time consulting after they're tired of the corporate world and realize that the company is charging the customer $200/hr while you're being paid $50/hr to render service
The article you linked to makes no mention of healthcare being a factor, but *gasp* lower taxes, lower regulatory barriers, and better access to capital.
You may want to read things before using them to justify your position, or you end up looking silly.
Read the laws again. The law merely requires facilities that accept Medicare and provide emergency care to provide "stabilizing" treatment to emergency conditions without regard to ability to pay. Once you are stable, it is perfectly legal to toss you out the door. Your friend likely found a facility that was willing to cover her cancer under their charitable care program (some level of unpaid care is required in most states for non-profit hospitals.) If your friend had needed a transplant, she would have discovered the limits of that care. (People routinely die due to inability to get transplants covered; they are just too expensive for most hospitals to write off.) Dialysis is ALWAYS covered by Medicare as soon as four months elapse, no matter your age. But you need to find somebody to cover those four months, unless you want to head to the ER every time you crash. This is by no means guaranteed. You most certainly can be refused "essential" care, as long as you are not in danger of dying right there in the lobby. (As in, they'll treat you if you are about to fall into a diabetic coma, but aren't at all required to provide you with a monitor and strips (much less insulin) long-term to keep it from happening again.)
Next, there is no law saying that hospitals (or anybody) cannot collect on debt as long as you are making minimal payments. They can pursue debt collection equal to the efforts of any other unsecured creditor. And yes, if you show up and offer up what you can, the judge may take you up on your payment plan... but that's not set in stone and varies widely by state.
And yes, being out of work drives people to bankruptcy, but so do unaffordable co-pays and deductibles, policies with horrible annual limits, policies with limited coverage, unaffordable drugs, sudden catastrophe without insurance (it doesn't take much), etc. The paths to medical bankruptcy are many.
If you have a "serious" pre-existing condition (and the criteria for what that means is VERY broad), absent Obamacare, it's VERY difficult (and in many cases impossible) to obtain insurance. And what insurance is available is often utterly unaffordable and or horrible. (Any pre-existing condition you have will usually be outright excluded, along with childbirth.)
With Obamacare, those in excellent health will indeed pay more for coverage, but those in anything less than excellent health will now be able to obtain usable insurance outside of an employer group plan.
At a state level, Nevada, where I live, is ranked third by the Tax Foundation in "state business tax climate" for 2013, and conversely 47th in tax collected per person. We have no corporate income tax, no personal state income tax. We ranked 46th in federal aid in 2011 (same source), so it's not like Nevada is a "donor" state.
So, free of all of those taxes, Nevada's unemployment rates should be pretty good, because taxes are the worst thing for a regional economy, right? Except, in August, the state had the highest unemployment rate in the nation according to the BLS.
Yes, there are other factors besides taxation. There is regulation, of course, but it doesn't seem that much worse here than in California where I used to live. We have the double whammy of underfunded schools with a very strong teachers union, which pretty makes any improvement in education impossible. Our state legislature meets only every two years, and seems to function about on par with our federal legislature, so getting anything done from a legislative perspective is difficult. It gets really hot here about 1/3 of the year (although not much in the way of earthquakes, tornadoes, hurricanes, etc. - pick your poison I guess)
In my case, I was drawn to Nevada by the low taxation, but businesses are not crashing the boarders. Taxation is not everything. There is a balance to be had between taxes and other quality of life factors, some of which you need government actively involved with. Education, infrastructure, utility price stability also count.
The level of the taxes is not really important. What is at stake is what you get for the taxes. If taxes pay for education and healthcare, businesses get educated and healthy workers. If it pays a war in Iraq, it just benefits businesses linked to defense (well.. I should say war instead of defense).
Obamacare slightly reduces the cost of insurance for older people (like me) but then materially increases the cost for young males and in other ways in practice. Ever look at the demographics of a tech startup beyond a founder? At my startup, we pay for good insurance for our employees and while maybe my individual insurance is slightly cheaper, that is apparently buried in the noise floor of the increasing costs for the total employee pool. And the small difference in individual cost for older individuals does not materially alter the risk calculus for the individual in terms of whether they'll start a tech company.
It would be nice to see a little honesty that the law as written will be terrible for a lot of people. Including, empirically, tech startups. The percentage increases per employee are not small at all going forward and I know a lot of tech startups that are trying figure out if and how they can bury those new costs. I'm sure there are many policies that would reduce the direct costs for startups but this wasn't it, and predictably so. Perhaps media spin artists can contrive politically palatable scenarios where it reduces some startup's cost slightly while out here in the real world there has been a substantial increase in the cost of providing health insurance at tech startups.
Consequently, the idea that this reality will fuel a tech startup boom is some pretty strained reasoning. It may have some benefits but this won't be one of them. Obamacare might have helped some people but tech startups do not seem to be among them.
They/we may need medical insurance but this isn't it. Just because I'm dying of thirst in the desert doesn't mean that I am going to drink the glycol with water out of the radiator.
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The problem is the medical system itself uses corrupted, ineffective and extraordinarily cost inefficient methods favored by certain suppliers e.g. the pharmaceuticals.
I have a family member with stage IV cancer, once considered truly hopeless. Cost at this point is normally $1-2 million and certain death, usually gone 1-2 years ago. We used family science capabilities to identify, choose and use foreign, off-label and natural treatments. Some are not even allowed in the USA because, get this, they were not toxic enough for FDA approval !! Our cost to date? Under $40,000, alive and doing well several years later.
How much is Obamacare worth to us? Nothing, wouldn't pay most bills, so actually a negative value, subsidizing insistently dangerous interference. Better to just pay cash.
Nevada is a poor example. Their taxes are low because the tourism industry heavily subsidizes the entire state budget. Tax collection is quite high, but it's not coming out of the pockets of the residents of the state. Sales tax and vehicle registration taxes are also quite high. As far as unemployment, Nevada (especially Las Vegas), has a very uneducated, unhealthy, and transient population. Many people moved there during the construction boom, and the economy of the state is not diverse enough to accommodate the bust.
Scott
The theory is: We already subsidize health care for everyone. Get sick and collapse on the sidewalk? They take you to the hospital. If you have money or insurance, you pay. If you are a homeless person with nothing, the hospital eats the cost. Well, they actually spread the expense across all the paying customers.
Wandering in (or being carried into) an ER is an extremely inefficient way to handle most medical issues. It would be more efficient to get people into a clinic for some treatment before they become an emergency. So Obamacare is aimed at getting the above subsidy to the people at a point that would buy them better and cheaper care.
Now, the reality is that every special interest has gotten their fingers in the legislation. So its probably rife with loopholes and opportunities for abuse. We will have to audit it carefully, plug the loopholes as they are discovered and throw some scam artists in prison to keep the program from bleeding money. It can be done, but only by people willing to work on it. Jumping up and down and whining will just play into the hands of the crooks.
Have gnu, will travel.
"People who get sick' aren't really a small subset.
How many people do you think live to old age without ever having to see a doctor?
And yet, the "younger crowd" seem to support Obamacare. Either they're wrong or you are. PPP shows that the 18-34 group are most likely to support Obamacare of all age demos.
You are welcome on my lawn.
Previously...I liked contracting 1099. I could get (even with pretty heavy pre-existing conditions 6 years ago) a high deductible medical plan, for emergencies. It was about $1300 deductible, but I also was able to set up a HSA (Health Savings Account, which is not use it or lose it like FSA) and sock away about $3100 pre-tax for me routine care.
This was pretty sweet...however, I hear that Obamacare has started taxing FSA's ...and I'm guessing HSA's now are no longer pre-tax.
I don't understand this move, it seems they'd want to keep this to encourage people to save for their own medical routine needs.
Anyway, that worked out great for me in the past.
I'm seeing, however, all the fallout from Obamacare now...spouses being removed from coverage, and people getting reduced to 28 hours so that they are now part time and not costing employers $$$.
I'm wondering if this move *might* increase employers hiring you on as a 1099 contract employee rather than as a W2 employee (especially if you are incorporated and do 1099 Corp-to_Corp)?
I for one would enjoy a work world where this was easier to do. I'm wondering if this might be another unforeseen trend started by the new act? I'd like this, but I'm wishing they'd NOT tax the HSA's or even FSA's if you want to...so that you can save your own money pre-tax, which should encourage most people to do just that.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Reagan and Bush both proved that taxes are already too high. They both lowered taxes and the result was an increase in funding to the government.
Only in your imagination. The only time the deficit has gone down (in fact completely eliminated) was during the high tax years of Clinton. The economy did great and unemployment went to a record low.
Most people are healthy and only need to learn to stay healthy. Most are better off with a medical savings account than with medical insurance. Why give money away for someone else to make billions off of it while you get little more than weak promises that in the event something bad happens, you might get minimal care?
We live in such a debt financing society we've all completely forgotten how to save money for bad days. Does a credit card really substitute for a savings?
The cut back in coverage started around 2000. Obama was a Senator then for god's sake. The part time work started after the banks exploded from the mortgage bubble.
My HSA is still tax free. 1099s are mostly a tax dodge, taking advantage of desperate people or both. Companies hire 1099s for what's really full time continuous work and call them 'contractors'. The taxes are lower because you're not hiring an employee you're paying for work. The reason you can't get a 1099 is the gov't is cracking down on that. It's only good for you in the short run. In the long run they'll cut your wages and benefits while underfunding the safety net you'll need sooner or later.
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..speaking of which, does TFA bother to address what happens to costs once the start-up grows beyond 49 employees?
Quo usque tandem abutere, Nimbus, patientia nostra?
Not a single person will lose insurance due to this law. Blatant fearmongering.
You are blatantly incorrect. Scores of thousands have already lost their insurance due to this law:
Ten states where Obamacare wipes out existing health care plans
Trader Joe's Invites Part-Timers Losing Company Coverage To Seek Additional Obamacare Subsidy
Despite Obama Promise, Many Coloradans Losing Their Health Insurance Plans
Q: What does the "B." in Benoit B. Mandelbrot stand for? A: Benoit B. Mandelbrot
Reagan and Bush both proved that taxes are already too high. They both lowered taxes and the result was an increase in funding to the government.
Only in your imagination.
No, the original comment was correct. Federal revenue did go up... but spending went up even more.
The only time the deficit has gone down (in fact completely eliminated) was during the high tax years of Clinton. The economy did great and unemployment went to a record low.
Don't forget that those were also the years when the GOP took over Congress and restrained spending, a little bit, for a little while.
Q: What does the "B." in Benoit B. Mandelbrot stand for? A: Benoit B. Mandelbrot
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All of you guys arguing about a system that makes healthcare available to those who don't have it - assume the vulnerable as it seems they are most likely to benefit - sounds like base savagery. I can't begin to imagine that you think the free market is a better fit for such a basic human requirement.
Considering the key part to ACA is forcing people to buy private health insurance (or pay a penalty tax), it is more corporatist than socialist. A socialist program wouldn't farm out healthcare to a for-profit business.