Will health care reform encourage greater creation of small businesses?

Does employer-based health care coverage unfairly hold captive employees with dreams of quitting their jobs to start their own business?

I was thinking about question from the perspective of the person who has a pre-existing condition and would not be able to obtain private individual health insurance. If that’s you, would you leave a job that provides you group insurance to open up a company that directly competes with your current employer, if you couldn’t be insured?

I became interested in this idea a few days ago while listening to NPR’s Fresh Air with Terry Gross. Her guest was Princeton Healthcare Economist Uwe Reinhardt and much of the discussion revolved around the Obama’s health care reform agenda.

As usual, Terry Gross had a very interesting discussion. Here it is

http://www.npr.org/templates/story/story.php?storyId=101706614

I’ve always been very interested in health care reform, the impact of not having universal coverage permeates our entire culture, and we often don’t even recognize it.

Professor Reinhardt commented that unlike the period when Clinton attempted to reform health insurance, many of the normal opponents to reform have changed their tune, specifically hospitals, doctors and insurance companies. They are all now really feeling the pressure. He further commented that while many businesses want to be relieved of the economic burden in the short term, he expected many employers to want to keep the employer-based system, even if it’s expensive. He said he expected this because in the next ten years, the age demographics in the country will shift so dramatically, that there will be a massive shortage of labor in the workforce. So, employers will want to use health insurance as a recruit and retention lure.

In the current economic times, it’s some relief to know that structurally, unemployment will go down over the next several years, and apparently substantially. I double checked the professor’s demographic theories with the Bureau of Labor Statistics, and even though they are only projecting until 2016, they basically agree that there will be a shortage of workers in the coming years.

http://www.bls.gov/news.release/ecopro.nr0.htm

As someone who thinks about employment all the time, I found the idea that employers use health insurance recruiting and retainer employees probably also has more to it. For the sake of argument, let’s assume that it was pragmatically impossible to obtain individual health insurance. Only individuals who are willing to risk not having any coverage would open new businesses. Small businesses turn into bigger businesses that compete directly with existing businesses. So, it make perfect sense that existing businesses with foresight would want to keep employer-based health insurance, not just as a way to recruit and retain talent, but to keep that talent from competing against them.

So, for those people who see government run health insurance as socialistic, my view is that it’s anti-competitive.