Health coverage a ‘gift’ to ourselves

One of the more curious “gifts” in Mitt Romney’s list of ways Barack Obama allegedly bought off voters was letting young people up to the age of 26 stay on their parents’ health plan. It was a gift, all right, a gift to America.

How so? Consider this finding in a RAND study on whether employer-based health insurance is a barrier to entrepreneurship: The rate of new business formations jumps at or around age 65 (particularly in the month that the person turns 65). What happens at age 65 is that Americans qualify for Medicare.

The authors of the study (Robert W. Fairlie, Kanika Kapur and Susan M. Gates) found the spike in business starts by those around 65 to be the purest evidence of “entrepreneurship lock” — the notion that many would-be entrepreneurs stay stuck in jobs for fear of losing health coverage.

Isn’t 65 traditionally retirement time? Apparently, not for many. The study looks into the possibility that Social Security, pensions and other retirement plans kicking in around that age would make some feel more secure about taking on financial risks, but found no link. (The appearance of new income streams could just as easily help these folks retire and do nothing. My thought, not the researchers’.)

Let’s go down the age ladder. The RAND study noted no change in business ownership rates among people 55 or just under. Those in their 40s and 50s are probably under the most severe entrepreneurship lockdown. These are adults who may have gained a good deal of expertise in their jobs. They may have saved up money and are ready to go out on their own. But the older you get, the more expensive your health coverage becomes.

If you are responsible for children, you may not want to risk their health coverage, even if you’d roll the dice on your uninsured self getting sick. And if you or a child has an expensive pre-existing condition, insurers may refuse to cover you at almost any price.

Romney didn’t include the rest of Obamacare in the list of “gifts” he didn’t approve of, but other elements of the Affordable Care Act could also help free wannabe entrepreneurs from job lock. One is guaranteed coverage for all regardless of above-mentioned pre-existing conditions. Another is the state-created health exchanges that help the self-employed find coverage at a reasonable price. And a third is peace of mind: If you exhaust all your savings and mortgage your house to start a business and the enterprise fails, leaving you broke, your family can get subsidized health coverage.

Go back to a gift Romney did cite — coverage on the parents’ plan to age 26. Think of the 23-year-old, out of school in a tough job market but with a boatload of computer skills. Energetic and possibly not supporting others, these young Americans are at a perfect age to test an idea in the marketplace. True, they are probably healthy and more willing to skip getting insured, but still.

The deal in Obamacare is that everyone must obtain health coverage, but everyone can get it at a price they can pay. No American family faces financial ruin because a member falls ill and needs expensive care.

The whole idea of employer-sponsored health coverage is a historical oddity from the wage and price controls of World War II. Obamacare offers a step away from that irrational link.

So here’s a government benefit that actually encourages the creation of new entrepreneurs. Guaranteed health coverage is a freedom card for those who want to spread their wings in a business of their own. It’s a gift to ourselves.

© 2012, Creators Syndicate Inc.