Tuesday, September 8, 2009
Going Solo - A Side Benefit of Health Care Reform
From Scripps Howard:
You've wanted to write a book or start a company or open a restaurant, but you've always been afraid of quitting your job and losing your health coverage. So would you be more likely to take an entrepreneurial leap if you knew you and your family's health expenses were covered, no matter what?
It's not a new question, but it's one that's being asked with more frequency now that health-care reform is again on the agenda in Washington. And while research on the topic has been limited, some studies suggest the patchwork system of employee-paid health care is discouraging entrepreneurship.
That's because of what's known as "job lock," a bit of economics jargon that's been in vogue since the 1990s, the last time Congress and the president staged a real health-reform debate. Basically, "job lock" means that you're more likely to stay in your current job, which offers health insurance, than take a chance on a startup business, where health expenses would come out of your pocket. So people are "locked" into jobs that they no longer enjoy, where they are economically unproductive, or so the theory goes.
This article goes on to say that some people dispute the reality of job lock, that insurance benefits through COBRA plans make it possible for workers to shake the dust of jobs they hate from their feet and get into work they love.
We live in the real world, you and I. We know that COBRA is ungodly expensive and no one but the exceptionally brave or exceedingly desperate would opt to bail out of a decent paying job into an uncertain future with only COBRA as an insurance plan.
Truth be told, if you're that brave or desperate, you'll probably decide to jump without the parachute because the cost of COBRA would eat up what little nest egg you've saved.
But how exciting if we didn't have to work just to be covered by insurance! What if we could write that book, compose that symphony, start that diner or join the Peace Corps for a year? Many, many people would stay in their jobs. They're not there for the benefits, they're there for the pay, the security and the relationship they've built with their employer and coworkers. But some of us, oh, some of us have dreams that we quietly pursue in the few free hours we have each night. And some of us have risked it all and tried to make ends meet with art - insurance is a wild, impossible dream for many artists. And some of us want to start our own companies.
Let me give it back to the newspaper article:
"The type of universal health insurance coverage policy proposed by President Obama will clearly promote the freedom of workers to leave their jobs to start new companies," writes Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology. "By solving a major impediment to mobility in the U.S. labor market, a larger government goes hand in hand with more business development."
In other words, universal health coverage also ensures creativity.
And now I will turn it over to Robert Reich, who makes the whole issue pretty darned simple.