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Health Care Reform for Entrepreneurs Featured

Matt Submitted by Matt     September 01, 2009    
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The health care crisis is creating an administrative and legal burden for small businesses. From high costs to low quality, entrepreneurs are faced with a difficult situation.  The current system subsidizes employer-provided health care, which discourages entrepreneurship by keeping employees stuck in jobs because they're afraid to lose their benefits. To relieve the burden on entrepreneurs, empower labor mobility, and help solve the health care crisis, we propose the following three steps:

1. Free choice for employees

America's current system of providing health care is right out of the Company Man days of the 1950s.  Under current tax law, employers get a tax subsidy to provide health insurance to their employees. This system might have worked well back in the day, but is woefully inadequate for the modern age, where the average worker changes jobs seven times.

Worse, employees who have employer-provided insurance are missing out on potentially better options.  Since buying their own insurance outside the company would be more expensive, there is very little meaningful choice for them.  Any wonder why a choice-less, competition-less, one size fits all system is failing?

Rather than having employers find, purchase, and provide health benefits for all of their employees, each employee should be allowed to choose his or her own health benefit package.  Then employers would just have to contribute a specific and defined amount to an employee's health care account, rather than having to deal with all of the administrative details.

For employers, the system would cost the same and be less one thing to worry about.  In fact, as competition increases, costs will likely go down, saving the business money as well.

For employees, the system would be a revolution.  Providing free choice would not only let employees find the health benefit package that works best for them, but it also reduces the worries and concerns about losing one's job.  If health benefits were provided outside of employment, we could achieve greater economic mobility, and solve the health care crisis at the same time.  Talk about a win-win.

2.  Free choice for all Americans

Unfortunately, the wave of personalized care is weakened by the unyielding resistance of regulation.  Each state has its own collection of health services that all insurers must cover, ranging from maternity care to mental health coverage, regardless of who needs them.  Not only do such one-size-fits-all mandates drive up costs, but it inhibts the health care system from providing the type of personalized, custom-tailored care that is actually proven effective.

So for example, when I buy insurance in California, I have to buy it from an insurer who offers me acupuncture therapy, prenatal care, and a bunch of other flotsam I will never need.  Amazingly, it's illegal to shop out of state to get plans without such mandates.  So there's no real price competition, and I'm stuck buying "private" insurance that is arbitrarily controlled by public policy.

As important as these services are, the fact is that not everyone needs them.  Studies show that giving people the choice to purchase the coverage they need would save everyone from $525 to $1,050 a year in premiums.  Moreover, such a system would open up the insurance market to specialized insurers who could better meet the needs of individual Americans.

President Obama has spoken of creating a national insurance exchange, where all Americans could buy insurance from anywhere.  However, in its current form, this exchange is designed to add even more mandates on top of existing rules. Far better would be to truly empower consumer choice, allowing Americans to select the insurance programs that work for them and their families, not what Congress thinks they should have.

3.  Unshackle entrepreneurs

In most states, hospitals and other health care providers must seek approval before expanding their facilities or making other similar investments.  This process, called a certificate of need, requires a board of appointed experts to determine whether a proposed project is wise or necessary.

In every other business, new investments are made according to whether consumer demand will support them.  What's more, innovative markets thrive on superfluidity.  For example, the life-empowering innovation we knew as Google could hardly have been deemed necessary at the time: with Yahoo, AltaVista, MSN, AOL et al, why did we need another search engine?

Markets need freedom and autonomy because innovation always involves risk, uncertainty and experimentation.  Most successful entrepreneurs are successful precisely because of their iconoclastic and unique approaches.

Government, by virtue of its one-size-fits-all approach, has a severe difficulty adapting to change.  For an example, a New York physician named Dr. John Muney recently opened an innovative practice for uninsured New Yorkers.  For only $79 per month and unlimited office visits with a $10 co-pay, Dr. Muney offers the uninsured everything from mammograms to mole removal form.  But the New York state board of health threatened to shutter the innovative practice, arguing Dr. Muney was operating as an "insurer" without the proper licenses.

In fact, Dr. Muney is not an insurer, but a doctor whose practice doesn't fit neatly into existing categories.  Such innovators are precisely the people who should be free to enter the marketplace and offer their services to willing consumers.

 

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