Thursday, September 24, 2009

Health Insurance and Entrepreneurship in America

Ezra Klein makes a good point regarding private, non-portable health insurance:

We may just have a culture in which people who care about health-care coverage don't think about becoming entrepreneurs, as they know perfectly well that they can't sacrifice the safety provided by a large employer. You've heard of learned helplessness? This is learned corporatism. A culture in which people didn't worry about health-care costs might also be a culture in which they were more willing to consider occupational risks.

So will health-care reform fix this? It will help. The various health-care plans under consideration all make life better for a would-be entrepreneur who wants to buy health insurance. The subsidies will help him afford coverage. The regulations will make sure insurers can't deny his family outright our jack up their rates. The exchanges will give him purchasing power and choice.

The question is really whether this renewed entrepreneurial spirit could make up for the deadweight loss from government-mandated coverage. Certainly, there are some people who choose not to buy health insurance. Taxing them would mean a loss of efficiency and, potentially, a loss of entrepreneurship. (Though the president denies that an insurance mandate would be equivalent to a tax increase, many economists aren't buying it.)

Ezra seems to be considering only the upside of mandated coverage. But, you may say, opponents of the plan tend to consider only the pitfalls, so can you really blame him?

Well, yes. I try to hold Ezra to a higher standard . . . .

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