Well, resources (what used to be called workers, employees or personel) come at a cost. And the investors are going to have to pay the market rate for engineers. I’ve worked for startups, and we had medical benefits. I don’t see why you view your personal medical expenses any differently than you do any other expense your family has. Investors pay for your family’s expenses or you don’t agree to work for them.

What I really think has messed up medicine in the US, besides outrageous malpractice lawsuits, is the fact that we buy medical insurance through our employers. Talk about supressing market forces! If I can’t change to a better insurance company without changing employers, I don’t call that a free market. The customer (me) isn’t the one paying the bill (my employer). The same is true with 401(k)s. Imagine if coming on board with a company meant I had to buy groceries at only one store, had to buy my auto insurance from one company, and had to buy a particular brand of automobile. It would be completely repressive. And yet, I would argue that medical coverage and retirements savings are even more important products/services to my family’s well being than those things.

On the other hand, having a situation where if you do not make a lot of money (hopefully by innovating) you die might provide sufficient motivation. :) But it is not really the sort of society in which I want to live.

I am not suggesting that startups get propped-up by goverment subsidies. I think that a business should succeed or fail on it’s on merits. Rather, I am suggesting that entrepreneurs should have to risk their money, time and reputation, but not their families lives, went starting a business.

You may think the current system works well but remember that people in countries that have universal health care live longer and pay less for health care.