Adding the risk of losing health insurance to the inherent risk of starting a business makes entrepreneurship all the more daunting. For someone who’s on the fence about staying in at a corporate job or leaving to start a business, the comfort of the employer-sponsored health plan can tip the scales in favor of the low-risk path.
There is a growing body of evidence to support the idea that national health insurance would boost entrepreneurship. Researchers at the Kauffman-RAND Institute for Entrepreneurship Public Policy found that people who get health coverage through their spouses are much more likely to strike out on their own, as are people who qualify for Medicare. Meanwhile, a reform in New Jersey that made it easier to purchase insurance independently has boosted self-employment. A nationwide program to provide insurance to low-income families with children also appears to have increased entrepreneurship.
National health insurance would act like these programs, but on a grand scale. Aspiring entrepreneurs would no longer have to worry about getting their health insurance from their spouse, or buying a costly plan on their own in the private market; it would just be there, in the background, providing a safety net that makes the prospect of starting a business less frightening.
Similarly, national health insurance would also make it easier to switch jobs. Quitting your job to look for a better one can mean losing your health insurance -- a scary prospect, particularly for those with chronic medical conditions. Economists have found evidence that the employer-based health system locks people into their jobs. This not only gives employers more power to hold down wages, but it contributes to the nationwide trend of declining job mobility. Worker who are reluctant to move to the best jobs make the economy less productive.
Our current health insurance system is holding back capitalism. That system could be eliminated simply by ending policies that subsidize employer-based insurance, of course. But without a good replacement, the health insurance market will be plagued by the old problems of overpricing, market breakdown and inequality. Entrepreneurship and job-switching would still be out of reach for many without personal wealth or family support.
Instead, national health insurance -- of the kind that has been successful in many other developed countries -- would remove health risk from the decision to start a business or switch jobs. It would free Americans to pursue their capitalistic dreams. A dose of national health insurance might therefore be just what the free market needs.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.