When socialism is good for capitalism

March 27, 2007

A major barrier to entrepreneurship is the real fear of getting health insurance. How many people stay in stifling jobs just for this reason? It’s a cause of labor market rigidity, which is bad for the economy.
Massachusetts’ heavily regulated insurance market may keep premiums high, but guaranteed issue and community rating mean that insurance coverage is available and premiums don’t rise for the sick. People who are thinking of starting their own business often ask me about whether they’ll be able to get and keep health insurance. I tell them to relax –if they’re in Massachusetts.

But as an article in the Los Angeles Times explains, health insurance is becoming harder and harder for the self-employed to get, at least in other parts of the country:

A major source of health insurance for people who work for themselves is disappearing, casting thousands of contractors, freelancers and solo practitioners into the ranks of the uninsured with little hope of obtaining new coverage.

Health plans offered by professional associations were once havens for millions of people who couldn’t get coverage anywhere else. But as medical costs have soared, groups representing professions as varied as law and golf have been forced to stop offering the benefit or been dropped by insurers.

Among uninsured workers, nearly 63% are self-employed or work in small firms, Todd Stottlemyer, president of the National Federation of Independent Business, told Congress recently.

There’s a strong case to be made that  universal coverage would encourage business formation and increase economic growth.

2 thoughts on “When socialism is good for capitalism”

  1. Pingback: Colorado Health Insurance Insider » Grand Rounds at UroStream

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