Obamacare and startups

You no longer need to work for an employer in order to have healthcare. So, you are free to leave that employer and work on that software project that you have always really wanted to work on. This is the new status quo.

No doubt this new status quo will encourage many software engineers to abandon the companies they are currently working for and to do the kind of software tinkering that will result in the founding of their own startup companies.

So, one major category of beneficiaries of Obamacare, it seems, will be well-educated, healthy, hard-working, young Silicon Valley engineers, who will be freed from worry about providing healthcare for themselves and their families and will be able to do the kind of experimentation that will result in the Facebooks of the future.

This all sounds pretty good. But, there is, of course, no free lunch. Entrepreneurial software engineers will not be the only immediate beneficiaries of Obamacare. There will undoubtedly be many citizens who will not leverage the Obamacare subsidies they will receive in order to work even harder than they were working before. Rather, there will be an enormous subclass of individuals who will simply use the Obamacare subsidies to work even less, to contribute even less to society.

More importantly, you can be sure that, once you have made your millions or even billions in a software startup, the Federal government, having kept track (through the IRS, no doubt) of the fact that you received subsidized healthcare, will return to you and insist that you repay the debt you incurred when you took Obamacare subsidies. You can be certain that you will hear a new chorus of “You didn’t build that. We all helped you build it by subsidizing your healthcare when you were starting out. And now we want our cut.” Thus, Obamacare subsidies will just end up being one more way for you to become beholden to the Federal government and to enable the Federal government to lay claim at some time in the future to the wealth you have created for society.

Venture capital firms have to be very cautious. They have to ask themselves: if we allow the employees of the software firms that we fund to receive subsidized healthcare, are we creating an implicit claim on the value of the company we are creating?