American dream can be a nightmare

Without health reform, nightmare continues for entrepreneurs

There’s something about this huge debate on health care that’s been sorely lacking and … and that something is a  discussion of what health reform could mean to entrepreneurs.

Remember the American Dream? Where you come up with a great product or service and then open your own business? You work harder, not smarter? The business prospers, you make lots of money, satisfy your customers and then you retire financially secure?

Health insurance very simply messes up that dream. Politicians can cite all the data they want showing that more Americans are chasing the dream of entrepreneurship, but the sad fact is that many of those industrious Americans chase health coverage right back to the corporate world.

Why? Because when they’re hired in the corporate world, they get to dodge the arduous task of hunting for a low-cost health plan with decent benefits. They skip right by the stress of waiting to see whether they’ll get flagged for a pre-existing condition and denied coverage. And finally, they’re spared the huge premiums and out-of-pocket costs that await in the individual health insurance market.

The trade-off, of course, is “job lock” – the fear of switching jobs over the prospect of becoming uninsurable as a result of temporarily losing insurance coverage. Naturally, “job lock” makes corporate employees even more reluctant to attempt an escape to self-employment.

Health reform – and the proposals being debated in Congress right now – is absolutely critical to removing the existing nightmarish realities of the American Dream.

As Ezra Klein points out in a piece yesterday, “the various health-care plans under consideration all make life better for a would-be entrepreneur who wants to buy health insurance. The subsidies will help him afford coverage. The regulations will make sure insurers can’t deny his family outright our jack up their rates. The exchanges will give him purchasing power and choice.”

But it’s not just the Dreamers who benefit from reform that helps cure “job lock.” As economist Jonathan Gruber points out, “job lock” is bad for U.S. employers, who are often stuck with employees unwilling to leave a job that may not be the right fit for the employer or the employee. “Job lock” is also a roadblock on the potential of employees. “Some of tomorrow’s potential entrepreneurs are today’s employees at firms that provide health insurance,” Gruber says.

What’s more, he says, “job lock” makes America’s fluid labor markets less competitive internationally.

So what happens to the American Dream without health reform? Maybe it becomes a European Dream, as envisioned by this disillusioned guy.

The European Dream? Ouch.

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