No matter which side of the aisle you sit on*, today’s ruling by the Supreme Court to uphold the Affordable Care Act, a.k.a. Obamacare, is a big deal for the healthcare industry, but it’s also a big deal for startups.

It’s actually a very positive outcome for startups.

No, I’m not talking about health-related startups, like my own, which will certainly benefit from large health insurance companies and other healthcare providers trying to quickly adapt to a new way of doing things — investing and partnering with startups more than ever. My point is a more subtle one.

It’s about recruiting the best talent.

As someone who has interviewed dozens of people over the last few months, I’m surprised how many candidates really care about the healthcare coverage we offer.

The most shocking thing is how far candidates go to pretend they don’t care about health insurance, or to mask their interest on the topic. Think about it. If you are interviewing for a job, you want to talk about your skills and how awesome you’ll be for the company. You want to hear about the product, the funding, your salary, your stock options (and their potential), and other “big” issues.

Marcelo Calbucci

But when it comes to health insurance (or bus passes, or holiday policy, etc.) you’d feel like a big “don’t get it” kind of person if you asked about it. I’d argue startups that don’t offer any kind of health insurance might be losing candidates without even knowing that’s the reason, because it’s a frowned-upon topic for interviews.

The second point about why candidates care about health insurance is the fear of loss. Unless the candidate is unemployed, he or she has some kind of healthcare coverage, and although you can convert any kind of health insurance into a dollar value, some people feel the downgrade in health plan is a significant turn-off, even if the job includes better salary, bonus or a stock option plan with significant upside.

Well, that’s kind of going away and big companies should be worried. How many people are loyal to their employer just because of their healthcare coverage? How many might fear losing coverage either because they need it or because a spouse or a child needs it? It’s probably a non-trivial number. Could be 1%? 5%? 10%? Who knows. But it’s definitely not zero.

Part of this healthcare reform passed by Congress and just upheld by the Supreme Court involves a few provisions that I believe will make individuals have less fear of switching jobs. Although the Individual Mandate provision is the most talked about, that’s not the one I believe will have any effect on people being more free to switch jobs. The ones that will really make a difference are:

  • No more rescissions, so they can’t drop you from their plan.
  • No more discrimination based on pre-existing conditions, both in price and enrollment.
  • Health Insurance Exchange, a marketplace to buy your own health insurance plan.

The first two are pretty obvious. If you or a dependent has a health condition (temporary or permanent) that costs a lot of money, switching jobs is about more than just the new compensation and work you’ll be doing. It is a risk to give up the existing health insurance coverage you have. You know exactly how it works and it gives you comfort. What if the new job doesn’t work out? Can you find affordable health care coverage after that, knowing that your family carries a pre-existing condition? Well, that’s not an issue anymore.

The last bullet is less obvious on how it will help startups, but it’s not that hard to make the connection. Think about going to Amazon to buy your health insurance. Select how much coverage you want, what kind of benefits, and Health Insurance Exchanges will give you a list of multiple insurance companies for you to choose from. That’s how it’s going to work for you to buy your own health insurance plan.  Turns out, it’s estimated that up to 30% of employers will stop offering health insurance coverage to their employees, and instead offer vouchers to be used on the Health Insurance Exchanges. In other words, employers are getting out of the health insurance business and letting you decide what’s best for your family.

You might get a $400/month voucher from your employer and you go to the Exchange and buy whatever insurance plan fits your budget and meet your needs. Well, for the same amount of money you can actually get the exact same plan, being employed by your employer or not. If your next employer also offers vouchers (or plain cash) you can keep the exact same health plan without sweat. Same doctors, same coverage, same cost, same co-pay, same everything!

Well, look at that. The Healthcare Reform should have been called the “Employee Portability Act.” More power to individuals. Better for startups!

(*I’m always skeptical of opinions that start with that sentence because you know it’s a biased position pretending to be a neutral one, but not in this case.)

Marcelo Calbucci is the Co-founder & CTO of EveryMove, a startup creating the equivalent of airlines miles for your health so you can get a discount on your health insurance if you are taking good care of yourself. He can be followed on Twitter @calbucci.

Photo via Bigstock

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Comments

  • anon

    “If you or a dependent has a health condition (temporary or permanent)
    that costs a lot of money, switching jobs is about more than just the
    new compensation and work you’ll be doing. It is a risk to give up the
    existing health insurance coverage you have. You know exactly how it
    works and it gives you comfort.” Didn’t understand how is this an advantage to individuals?

  • anon2

    The public option didn’t fly, and insurance companies got to keep their antitrust exemption (price collusion is legal for them), so that $400/month voucher will buy only catastrophic insurance with a $10K deductible on the Health Insurance Exchange. My health insurance increases 30% annually now. I’m in favor of national health care, but the current plan (where by law you must pay whatever the insurance companies have mutually agreed to charge) virtually guarantees that almost all of workers’ income beyond basic needs will eventually be redirected to health insurance companies. Few people will want to pile on the risk by working at startups.

    • http://blog.calbucci.com/ Marcelo Calbucci

      Sorry, but Lifewise of Washington has plans starting at a couple hundred dollars, just as an example. The reason if believe there is price collusion is because the price is actually regulated by the government. Turns out on this new marketplace (the Exchanges) they will actually have to compete with each other (something they didn’t do before) and in market like that prices will likely be more competitive (TBD), but it’s irrelevant since my point is that whatever you had before (at your big employer) you’ll be able to get the same thing at a startup.

      • anon2

        The price is regulated by the gov’t like this: The insurance company asks the gov’t for a 30% increase, and the gov’t says “okay”. In my state, the state insurance commissioner must approve any rate increase the ins. company asks for, no matter how high it is; the request is just a formality. And yes, insurance company CEOs have an antitrust exemption that allows them to fix price increases, so they can all get the yachts they want.

      • anon2

        Sure, I could pay just $100 a month for a plan, but it might have a $500K deductible and so be worth only $10 a month.

  • guest

    what a flawed article…

    • Obama

      Mitt? Is that you?

  • Anon

    Marcelo, genuinely curious, are you covered by your Microsoft spouse’s health insurance or your startup?

  • guest

    Great piece and on target in my opinion. During my years as a self employed consultant, healthcare was a constant strain and worry. Obamacare would have begun to address some of those concerns.

    Now I’m again an employee with employer sponsored healthcare. But unfortunately the benefits have been curtailed each year and my out of pocket has grown faster than my compensation. I now have a pre-existing condition. I like my employer, but the recession has taken it’s toll and we’ve had 4 RIF’s. I hope we can pull through, but obviously that may not be the case.

    I feel at risk. With the pre-existing condition, even more so. I’ve been fortunate. My longest period out of work was one month. But stints as a self employed consultant have lasted for a couple of years. Obamacare gives me a good deal more flexibility and a bit of a safety net.

    Marcelo, before the pre-existing condition, I was practically a “poster boy” for good health: lots of exercise (e.g. some podiums in local bike races, tris, etc.), ate well most of the time, moderate drinker, controlled stress, non smoker, etc. I’m guessing I would have racked up some points with EveryMove. How about now with the pre-existing condition?

  • Kathy J

    We starting a new small business and according to the formula, we will have to assess what we earned in 2012 to calculate the 2014 premium subsidies (credits). This year we are operating at a loss and our premiums will be set accordingly. However, if we (hopefully) earn money in 2014, we will have to pay back any credits we qualified for based on the 2012 income – this on top of the taxes I already owed. How is someone supposed to plan to grow if a tax bill looms? I guess we’ll just wait-and-see and save our money to pay a looming tax bill instead of planning to hire new people.

  • Forrest Corbett

    Sorry Marcelo, I disagree. As you know I’ve had my own business for ~10 years. I know the independent side of health insurance all too well. For a while, my wife did medical billing so she’s familiar with all the games the state and insurance companies play.

    The short of it is, you and many others appear to be falling for the myth that this plan makes health care more affordable and more accessible. It actually does the exact opposite. For example, when the first bit of legislation went into place (both Federal and State), my cost of insurance went from about $300/mo, to $800/mo. Not only that, but then I couldn’t even buy health insurance for my son – it wasn’t for sale. While they can’t deny based on pre-existing conditions, they can just flat out deny you. And the state then has an exemption period – where health insurance companies are exempt from the laws – and they then sell insurance again.

    But you are partially right – it will lessen the difference between what BigCo offers for insurance, and what a startup offers. Just not in the way you describe – neither will be as good as before. Healthcare is going to continue to get MUCH more expensive.

    And while I’m at it… this legislation doesn’t even begin to address the root cause of the issue. It’s not even about health care. It’s about sick care and insurance. Fortunately, we have startups such as your own that seem to be looking at addressing the root cause.

    • ninjanurse9

      I work in the health care biz, and there’s a strong turn toward promoting health instead of just treating illness. The Affordable Care Act is part of the plan in Rhode Island to make it possible for thousands of formerly uninsured people to get health care. Community Health Centers are out front in this effort. People forget that it’s very costly to leave people without preventive care until they end up in the ER.

  • Peter H

    You are right – this is an upside. We are recruiting a guy right now who is thinking of going to Microsoft rather than our startup due to their benefits.
    However, any article like this needs to note there are also very very many downsides. For one, all of us productive folk are going to pay more of our own money to subsidize the care of the less productive. Couple that with reduced freedom, 150 new boards to decide on our care, etc, etc … not to mention permanently slower growth for the economy.
    People underestimate the power of economic growth. Growth is the reason a poor person today has better dental care than a king 50 years ago. Growth provides all the wealth and benefits we see around us – such as having the excess resources to take care of the environment.
    I was able to recruit just fine before this health care thing. If I gain a small recruiting advantage but give up the benefits of freedom and economic growth … that’s a terrible bargain.

  • Guest

    This poor guy is clueless. Lets all take a bet as to how many are paying less for healthcare 24 months from now. And the comments about potential employees being reluctant to ask about healthcare coverage? What kind of morons are you interviewing….that’s a standard topic of discussion and nothing in the current law is going to prevent someone from being a dope in an interview. As for the benefit for start-ups…poor analysis and even worse conclusions….spend more time coding and less time writing gibberish.

  • NewVC

    In the end, Obamacare will allow talent the option of free agency. That’s what big companies fear the most and why they fought it. Big corps use startups as free incubators but now startups can become lifestyle businesses and M&A will suffer.

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