Wednesday, December 12, 2007

BRRR! The Chilling Effect of Healthcare Costs on Entrepreneurship

Open Letter to Government Economic Development Directors:

You all say that the "cost of doing business" is key to attracting business headquarters & operating units to your State, City, etc. Given that many more jobs are created by small businesses than those with a 'headquarters' I invite you to consider the chilling effect of current healthcare policies (with the exception of those in a few progressive States) on entrepreneurship and innovation. Perhaps your first visit tomorrow should not be to the Chamber of Commerce meeting but to the department responsible for Healthcare Policy in your State.

When someone considers starting a business they are generally weighing the viability of leaving a paying job, with benefits, for a life of uncertain income with a future pay-off (or a certain income of exactly zero, for some time). While one can plan ahead and then accept the lack of income for a time, it is very difficult to factor in an expensive healthcare insurance premium along with basics like food & shelter and still find the math saying "go for it!"

Sure, COBRA sounds great as a way to keep those 'big company benefits' coming for a time while I build my new business, but with the premium cost each month almost equal to my house payment, can i really afford it? No. And this is not an exaggeration. I'm lucky to have a fairly petite mortgage payment because i bought long ago, but it would have cost me about $1,400/month to keep the very good insurance plan I was receiving from my last company. That has a drastic impact on my monthly budget for staying alive while I build a business that can support me, my family and eventually other workers.

So, would-be job creators go out looking for cheaper alternatives. And plans are out there - as long as you don't have any pre-existing conditions and don't plan to need any expensive healthcare (which you really wouldn't be able to afford with these inexpensive High-Deductible plans that require you to spend $10K out-of-pocket before they provide coverage).

The bottom line in all this decision-making is that a number of smart people with good ideas for new businesses that could grow the local economy are just staying put in corporate jobs that equate to financial security for their family (at least until the next round of layoffs). How about we take off the handcuffs that bind would-be entrepreneurs to their healthcare-providing corporate sponsors and find a way to create one pool of insureds who remain insured, at a constant cost, no matter who they choose to work for?

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