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.
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.