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Two Reasons To Craft Universal Health Insurance

By Marc Tracy

Reason 1: It would get small businesses out of the health care-providing business, a business they are in because of historical accident much more than because it makes sense for today's world.

Reason 2: It would greatly encourage entrepreneurship, as it would eliminate a logically external and unrelated obstacle--losing one's employer-provided health insurance without having an easy, affordable alternative--to quitting one's job and striking out on one's own.

Jonathan Weber, who is the small-business columnist of our sister site The Big Money, lays out Reason 1. He is himself a small business owner, and he, like many, includes health insurance as part of his company's compensatory employment benefits--"partly because it's the right thing to do, partly because it's important in attracting and retaining employees, and partly because my family and I need it as much as anyone."

Weber gives a brief primer on the historical origins of our divided welfare state, while noting that the current system, which is dominated by employer-provided benefits, is outdated and (great word choice here) "vestigial". "Quality health care is a societal good, so why should it be the obligation of private-sector entities to provide it?" he asks. "Why would we assume that health insurance should be a 'benefit' of employment? Why is America the only major industrial country that makes health insurance an employer duty?" And as for the plan to tax, temporarily, employee benefits in order to help fund an alternative government system, well, you can imagine how he feels about that.

Meanwhile, progressive blogger Matthew Yglesias highlights some important information: namely, that having benefits independent of one's job correlates very highly with the decision to become self-employed--e.g., to become an entrepreneur. The relevant control group here are those who can get in on a spouse's employer-provided insurance: and--whaddya know?--they are much more likely to be entrepreneurs than those who don't have spousal benefits. One researcher estimates that creating universal health insurance would increase the share of the workforce that is self-employed by at least 2% (it's currently 10%).

Rieva Lesonsky at AllBusiness sounds a similar cry. "The bottom line is health insurance is unaffordable for far too many business owners, and it's high time someone did something about it."

Amen. And we'd add that that "someone" should probably be the federal government. Not because we're ideological believers in government over the private sector. But because the private sector has had its chance, and not only are over 40 million Americans still uninsured, but many small business owners find themselves grappling with the financial and logistical nightmare of disadvantageous employee benefits, and many would-be entrepreneurs find themselves locked into jobs where they are making a far smaller contribution to the nation's productivity than they would be if it were just a little bit easier for them to become their own bosses.

Something to think about as the administration and Congress begin to tackle health-care reform in earnest.

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