Tuesday, August 11, 2009

Small Business and the Self-Employed

I got a visit from Zach Everson today, which reminded me how much I learned from his archive post about freelancers and health insurance. His argument is that our system of employer-based health insurance makes people more likely to tolerate jobs they're overqualified for, and less likely to strike out on their own.

Because it's so hard to get individual health insurance -- because we have so few legal and competitive protections in the current health care system, and have to depend on employers to negotiate on our behalf with health insurance companies -- the status quo makes it hard not just for freelancers, but for small business as well. In a business with one owner and five employees, just acquiring and maintaining health coverage is a significant amount of expense and work -- and in a small business, labor and resources are often in short supply. The fact that so few small businesses are in a position to give health benefits makes them considerably less competitive for workers than larger employers -- would you really choose to work as a bookkeeper at an Internet startup when you could get health insurance running receipts at the Gap?

I think both political parties are in favor of entrepreneurship and small business innovation -- but the current system of health insurance discourages those values. Being able to rely on a standardized, centralized option for health insurance would be a godsend for a lot of small businesspeople. When opponents of the public option claim that they are pro-business, they're really only talking about one kind of business -- health insurance companies!

UPDATE: James Kwak's essay "You Do Not Have Health Insurance" got picked up at the Washington Post -- very excellent!

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