YouTube: https://youtube.com/watch?v=R7LF5Vj2n64
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Duration:05:26
Uploaded:2013-09-03
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In which John discusses some of the many ways that our current massively inefficient health care system leads to the irrational allocation of capital. He discusses the fascinating cases of Henry Reich (creator of http://www.youtube.com/minutephysics) and Hank Green (creator of, you know, all this) and how in a world without health care reform, their careers might look very different. John argues that employer-dependent health insurance privileges employees over entrepreneurs, thus limiting innovation, growth, and job creation.

Check out Henry's videos: http://www.youtube.com/minutephysics and http://www.youtube.com/minuteearth

This is part two of a three or possibly four-part series about health care reform and the Affordable Care Act. Part one can be found here: http://www.youtube.com/watch?v=qSjGouBmo0M
Good morning Hank, it's Tuesday.

I want to return to the subject of America's fascinatingly inefficient healthcare system, and I want to make a capitalist argument for reform, but first- a brief defense of capitalism.

Okay, so think of the economy as a pizza. The richest people get the largest portion of that pizza, and the poorest people get very little of it. In fact, in the U.S, the poorest forty percent of Americans get less than point three percent of the pizza. That's problematic, don't get me wrong, but the cool thing about capitalism is that thanks to innovation and competition, over time the overall size of the pizza increases. So even if your percentage slice of the pie doesn't increase, you get more pizza. This is ultimately why you probably live in a place with a refrigerator and your great-grandparents probably didn't.

Essentially Hank, over time, free markets create free pizza. Well, it's not free actually, because innovation usually means, like, increased use of non-renewable resources and new damage to the ecosystem, but whatever- FREE PIZZA.

But, and this is very important, the only way to get that free pizza is to make the world safe for innovation and competition. Like, you need innovators to create refrigerators and then you need competition to drive the prices down. Besides creating free pizza, this also creates lots of jobs, so yay. Unfortunately, our healthcare system sucks at facilitating this.

Okay, so in the United States, most people get their insurance through their employers. Like, the vast majority of companies with more than 50 employees offer health insurance plans. That's how my family and I get our health insurance through my wife's job. But if you or your spouse don't work for a big company, it can be difficult to get insurance at all, because insurers can deny people access to coverage based on past health problems called pre-existing conditions. And this can lead to all kinds of irrationalities because people don't want to risk this pre-existing condition stuff so they either stay at their job with a big company or they remain full-time students because those ways you are guaranteed to have health insurance.

Example: In 2008, Henry Reich graduated from college, which meant he no longer had insurance, so he figured he should enroll in graduate school in physics so he could keep his insurance even though what he really wanted to do was do YouTube-ey stuff. Fortunately for Henry, at that very moment the Affordable Care Act came along saying that he was entitled to be on his parents' insurance until he was 26. And that allowed him to go work for a tiny online video company, which in turn lead to the creation of MinutePhysics and MinuteEarth, two of the most innovative, educational projects on the internet- telling us everything from what a Higgs Boson is to why locust plagues happen. Those projects have been watched hundreds of millions of times, and they make us smarter, but they also increase the size of the pizza. But crazily, if it hadn't been for the weird rule in the Affordable Care Act that you get to keep your parents' insurance until you're 26, none of it would have happened.

Let me give you another example: you. And by you I mean my brother, Hank Green, I don't mean the other people watching this video, although hi! Hank, you have ulcerative colitis, a chronic and very serious illness that's also extremely expensive to treat, so no insurance company will ever choose to insure you. Now thanks to the state of Montana, you currently have a so-called catastrophic coverage plan, which caps your out-of-pocket health expenses at $10,000 per year. That's not ideal, but before Montana passed that law, you couldn't get any health insurance at all, meaning that you were constantly at risk of, like, a million dollar bankrupting illness or injury.

So Hank, back before this government subsidized health care plan came along, you had to allocate every dollar you made to the I-don't-want-to-go-bankrupt-if-I-fall-off-a-ladder fund. But then, when the state of Montana came along and forced insurance companies to at least offer catastrophic coverage to people like you, you could suddenly use your resources more efficiently. Basically, you could take all that gosh-I-don't-want-to-fall-off-a-ladder money and start spending it on other stuff like, I don't know, DFTBA Records, which now employs lots of people. Or you could spend money to start VidCon, which now also employs lots of people. Then there's the Lizzie Bennet Diaries, and Crash Course and SciShow and Sexplanations and The Brain Scoop and the Foundation to Decrease Worldsuck and Subbable and the juggernaut known as 2D Glasses.

Hank, altogether these investments that you've made in innovation are responsible for dozens of jobs and for a significant growing of the overall size of the pizza. And none of that could have ever happened without publicly subsidized health insurance. Now of course, Hank could have gone on to work for a big company after college and he could have gotten health insurance, but then there would be no nerdfighteria, no VidCon, no DFTBA Records, et cetera. Career decisions should be about finding the place where your talents meet the world's needs, not about finding the place where you can get health insurance.

Okay, so this all took a hilarious turn recently when Henry turned 26 and aged out of his parents' health care coverage. He then had to apply for his own insurance and sure enough, he was turned down because of the pre-existing conditions of tinnitus and tendinitis. That's right, he has a little bit of a ringing in his ear occasionally and his knee gets sore because he runs a lot, because he's so fracking healthy. Now, of course, on January 1st, 2014, Henry will be eligible for coverage as everyone else will be through the Affordable Care Act. But if that didn't exist, he would be forced to choose between MinutePhysics and his health. That is a ridiculous choice. And that ridiculous choice is lived by tens of millions of Americans, has inhibited innovation, prevented job creation, and it has made the pizza smaller than it ought to be.

Hank, there are only a few things that really piss me off in this world, and one of them is small pizzas.

So that's my capitalist fiscally conservative case for healthcare reform. For too long, we have privileged employees over entrepreneurs when we need entrepreneurs like Henry and Hank to maximize economic growth. Hank, thank you for being the engine that drives job growth in the American economy and for giving lots of people jobs, including me. I will see you on Friday.

[spins in chair]

Informational videos are allowed to be more than four minutes long.

[looks at open desk drawer]

Has that been opened the whole time? Dang it! Sorry. You saw the secret innards of the set, which is really just my desk.