Health Care and Small Business

There are two linked issues when we talk of small business and health care. One is that the cost of providing health care as a ‘benefit’ to employees often prohibits a small business owner from so doing. Indeed the horror stories of what happens when an employee in a small business actually makes a large claim are legion: one company faced an increase in premiums the next year of 40% simply because one employee had surgery. The result? It was forced to drop insurance and therefore a bunch of people found themselves uncovered. Nice huh?

A related issue may have been unearthed by the Center For Economic and Policy Research [CEPR] – where Dean Baker holds court. They have just released an analysis of OECD data that shows a remarkable fact about our economy: we don’t have as many small businesses as most other large industrial economies.

This flies in the face of received wisdom here: our self image is that we have a huge and vibrant small business economy that sprouts out giants like Microsoft at a prodigious rate. In fact we imagine ourselves as the epicenter of small business activity.

That this is not so is both a shock and needs some explanation.

The CEPR’s take is that the cost of health care discourages entrepreneurship. Such is the cost of getting adequate insurance many would-be entrepreneurs prefer to stay within the relative safety of corporate America.

What else could it be?

I assume the anti-reform folks will conjure up an alternative – perhaps Americans just don’t have that entrepreneurial streak in them. They’re just not risk takers.

One way or the other, the CEPR report opens up a can of worms.