Health care incentives and disincentives

May 2, 2008

Hilzoy points at a recent health care poll:

The poll also found that in the past year, 23% of U.S. residents said they or a member of their household had either decided to stay with a current employer, instead of accepting a new job, or had switched jobs because of health insurance coverage.

This is how our current health care system harms small businesses and rural areas. I’m lucky that my own company even has health insurance options. But it costs several hundred dollars a month to keep myself, my wife, and my son covered. I’m either lucky to be able to afford it or stupid enough to trade health security for the benefits of working for a small firm.

And yes, the quality of health insurance is a real problem for small companies trying to attract experienced talent. College graduates and young people starting their careers don’t have to rely on health insurance as much and many of them don’t have families to care for, so they don’t think much about health care. Experienced workers, however, often do have families — and if they take a smaller health care plan that costs more they place themselves at significant financial and medical risk.

So what the current system does is privilege large employers in the job market while significantly weakening the ability of small business to recruit. And then once the hire is made, it encourages workers to stay at the large company — while the longer one stays at a small company, the more one’s risk is compounded.

Just one more of the many ways our current policies are not good for the small businessman.

Posted in Politics