On health care policy

Since it now appears very likely that the United States will have undivided Democratic control of the federal government in the coming year, I have to anticipate passage of the Pro Act, a federal equivalent of California’s AB5 (which I thought I had escaped by moving to Kansas). That will almost surely make it impossible for me to work as a freelancer—and I don’t anticipate being hired as an employee, even if I wanted to be. So I look forward, unhappily, to the prospect not only of losing roughly a third of our household income, but of being prevented from doing work I love and am good at. I hope that I’m wrong, but things don’t look good.


They passed a similar law back here a couple years ago. I read up on the act a while back and it seemed aimed at jobs from the so-called gig economy. I may be wrong about it though. And laws don’t always hit exactly where they aim either.

Over here the similar law was aimed at companies evading labor protection laws by hiring a lot of “freelancers” through agencies and then having them work for them just like employees would with all the same restrictions but none of the benefits. I want either my freedom as a freelancer and my rights to decide how when and where I work, or the safety of an employed job–not a mix with the worst of both worlds. The law actually made the distinction clearer for me.

Just as you are right now, people here were very concerned. Some said, it would collapse the entire software sector. It didn’t. It changed some of the practices around hiring pseudo-freelancers and it didn’t affect people like me at all. But I don’t know the details of the US law and they may be vastly different. So, maybe through my example I could lessen your worries a bit. In any case, I wish you all the best and hope that your freelance work will continue to come in and you won’t be affected.


Labour laws are always tricky to navigate workers freedoms with the organisations not abusing these freedoms

Un the UK ‘zero hours’ contracts are common for low paid workers. Companies have found that they can exploit workers with these contracts leading to many calling for their banning. However there are a number of uses where they are useful (say retaining staff for conventions) as the work is sporadic.


In California, under AB5, large numbers of freelance writers, often journalistic, were notified by the people they wrote for that their services were no longer needed. In some cases, the publishers created a limited number of full time employee positions, only a fraction as many as the number of people who had formerly written for them. I checked into AB5, and it included editors in the same category as writers.

The legal boundary was no more than 35 pieces a year for any one client; if it was more than that, you had to be treated as an employee. Some freelance writers did that much in a month. And I do more than that for at least three of my current four clients. So I think things look bad.

Anything further I can say about this is going to be political, and likely to be contentious, as this is a subject on which my views are radical (though even if they were conservative, political discussion is not the custom here). So I apologize for not responding to all of your comments. Let me say that I appreciate the kindness of your intent despite probably disagreeing with your political philosophy.


In California, there is also the recently passed Prop22 which allowed app-based gig-employers to continue to treat their workers as independent contractors rather than employees.

The following is meant to be informational for non-USans, rather than a political opinion. I’ll remove it if it is deemed to cross line.

Because of the way healthcare in the US is tied to employment, the employer has to pay for the health insurance of full-time workers. Companies realized that they could defer these costs by a) only hiring part-time employees, since 2 people who work 20-hours a week each are cheaper than 1 person who works a 40-hour week or b) using contractors, many of whom work for agencies that pay for health insurance. Payroll tax laws certainly also play a role.

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Thank you for this, coming from a county with a nationalised health service* it helps me understand the difference in these kind of roles.

*For the next week.


I don’t think b makes any sense. If you hire a contractor, and they have to pay for health insurance, then that’s an expense of doing business for them. They can’t continue to operate unless they make enough to pay their expenses. So what they charge their clients will include the cost of providing health insurance. It’s just like renters paying enough rent to enable their landlords to pay property tax. The costs don’t magically vanish just because there’s another link in the chain.

And yet, they still come out ahead. I won’t pretend to understand the finances behind it, but it is common practice in Silicon Valley. There is also very wide disparity among the quality of healthcare insurance provided, from "minimum required by law’ to “tangible employee benefit.” I’m lucky to be working for the latter.

Much like the stories you read about the rideshare driver that nets a negative take-home pay, after paying taxes and insurance and all of the expenses that may not be completely obvious. The contract workers are accepting less than they should be willing to. The companies know this: they’ve done the math and they know it’s cheaper to pay the gig worker what appears to be a good rate but actually is not.

I will refrain from imparting my own biases and beliefs into the conversation any more than I already have.

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Well, of course they (often) come out ahead (the ones that don’t end up going out of business). The way they do that is by charging enough for their services to cover the expense of whatever health insurance they provide. But that means that the people who contract with them are paying for that much health insurance. It’s not broken out as a separate item: *HEALTH INSURANCE. But it’s still there in the total.

My personal preference in health insurance would be to have substantially less than what is now supposed to be the legal minimum. I want insurance for catastrophic expenses like surgery or a major illness. But for routine health care, or occasional larger procedures that aren’t catastrophic, I’d rather pay out of pocket. That way I’m not paying the administrative overhead of having my money go to an insurance company that then sends it to a care provider. And back when I did pay out of pocket, I regularly had providers say, “Oh, no insurance? We’ll give you a discount!”—presumably because dealing with insurance companies imposes costs on them as well.

Unfortunately, insurance often works exactly the reverse of that way. I had optional dental insurance for a year or so, as part of my Medigap policy (a private policy that supplements Medicare). But then I had dental expenses, and I discovered that my dental insurance paid the first thousand (which I could have paid on my own) but paid nothing toward anything past that (which was where I might have actually wanted insurance and benefitted from it). That is, it did nothing that was any use to me. So I cancelled the dental and optometric parts of the policy and will never use that option again.

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There is a common tactic in pricing to have a discrepancy between list price and discounted price. As a product manager, I have to account for discounting in my pricing models and margin calculations. Procurement departments demand discounting (it’s now they get measured), so we bump up the list price so that we can give a discount. You see the same effect with retail stores who are always having sales. When JC Penny’s got rid of the sales and just lowered their “everyday pricing” to match, they lost customers. Even though the customer was paying the same amount, they weren’t getting a discount, so they went elsewhere.

I’m sure healthcare and insurance companies have similar considerations. The healthcare provider lists a procedure as $100. The insurance companies have negotiated an 80% discount, so it only costs them $20 (and costs the patient nothing (I’m ignoring co-pays)). For the uninsured, they give a 25% discount because the actual market value for the procedure is $75.

I don’t think I follow the reasoning. Let’s say the actual market value is $75. Then if an uninsured person pays $75 and insured people pay $20, the average is going to be less than $75, probably much less; if 80% of patients have insurance, it will be $31, for example. It appears not only that no one ever pays the list price, but that the average is a lot lower than what you are calling the “market price.” So what does market price mean? It seems strange to say that insurance companies aren’t part of the market when they’re the majority of purchasers.

And also, it seems as if you’re saying that health care providers have an incentive to tell out of pocket purchasers they’re getting a discount, because people will say, “Oh, that test is discounted to $75 from $100? I’ll have it!” when they would say “Oh, that test is $75? No, I can’t afford it.” Most people who discuss medical expenses seem to think that they are far less optional then that—that what health care people purchase has very sensitivity to price (in economic language, I think it would be called inelastic). I’m not saying that they’re right, but I’m saying that you seem to be viewing health care more as a commodity than most people do.

Here, I’m assuming the “market price” is what an uninsured consumer with the option to shop around for the price is. Insurance companies operate on their own model, where they purchase in bulk, at much lower margin to the health care provider, but profit is made by the health care provider through volume. This is a greatly simplified model from someone not in the healthcare industry.

Mod voice: OK, let’s see if this works; people can at least ignore it more easily if it’s its own topic. And the whole thing can be killed quickly if needed.


Turns off reply tracking

Go for it people!


I don’t think I ever worked for an agency that provided health care (for an affordable price, at any rate). And since they did not need to pay for insurance, I’m sure the agency was making bank on its workers.

You remind me of my favorite economics joke: “We lose two dollars per unit sold, but we’re making up for it in volume!”

Okay, I’ll stipulate that terminology, though it’s not how I would divide things up.

I can see two theoretical models here. In one, the insurance companies have total monopoly power, and can just dictate the price, subject to the providers saying, “No, sorry, we can’t even offer bilateral orchidectomies at that price.” In the other, the insurance companies are influenced by the providers, so the providers have some incentive to set a list price that will make the insurance companies think they need to offer the highest extractible payment. Since most health care is covered by insurance, the list price will be determined by that.

Then the size of the discount would possibly be influenced by how much is saved by not having to deal with insurance companies (and wait for them to pay up!).

I’m saying all this speculatively, by the way; I haven’t actually worked in this area, or studied health economics academically.

On a different topic, I would note that in dealing with cell phone providers and the like, my habit is to ask, “How much will I be paying after the initial discount stops applying?” And then I base my decisions on that, not on the startup price. If they won’t tell me the regular price, I’m less likely to deal with them, because I don’t trust them to be honest.

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What is written here is awaiting general consensus on whether or not we should discuss personal feelings on ehtics.

Placeholder for now!

I am waiting for a response to my inquiry about whether ethics is an allowable topic for discussion here. But until then, let me simply say that not everyone agrees about ethics. By the ethics I believe in and live by, what you are saying is not only wrong but an active plea for evil. You should not assume that “ethics” is a subject on which everyone shares your views.

This is one area where US healthcare providers (I’m talking hospitals here, not clinics for elective procedures) are notoriously opaque or labyrinthian. People end up getting charged $30 for single aspirin during an ER visit or hospital stay.