« She's Geeky | Main | Give an XO, Get an XO »

An Unexpected Engine for Innovation

Could universal health insurance be an engine for entrepreneurial innovation?

I don't mean innovation in the healthcare space in particular, although that's possible. I mean more generally, as an unanticipated benefit, an "economy of scope," if you will, of universal health coverage. It may well be that a shift to broad health coverage could trigger a period of surprising economic growth. This may actually be an argument that would win support for single-payer insurance among those not persuaded by the moral or social aspects.

I came at this thought in a somewhat roundabout way. It will come as no surprise to anyone who has done a rapid succession of talks and travel that, a couple of days after getting back from Zürich, my immune system went on strike and I was hammered by one of those colds that served as a reminder of just how much we take our health for granted. My current health insurance situation is a bit complicated, as it is for most freelancers, and although this situation wasn't enough to warrant going to a doctor, I began once again (in my waking, lucid moments) to think about whether I needed to find a "real" job that would come with benefits such as health coverage.

Today, it struck me: I can't be the only person facing this kind of choice.

How many people want to be out there, trying new professional experiments, working for themselves, but are held back by the thought that doing so would mean a lack of real health insurance?

It's not uncommon to see paeans to the entrepreneurial spirit of US citizens*, and read consultant-ese observations that the one success skill in a rapidly-changing economy and society is flexibility, a willingness to try new things. This latter argument makes sense, from the "economic resilience" perspective. In a period of turmoil, successful adaptation demands the ability to iterate, rapidly and in parallel, multiple different models. With product design, it may be sad but ultimately of little consequence to toss out the less-adaptive concepts; the same cannot be said for human lives.

This is the health care risk at the heart of entrepreneurialism: if you or someone in your family gets sick or injured, you could easily lose everything. And if you have a "pre-existing condition" (such as my palindromic rheumatism), you're really out of luck. If you're youthful and willing to take a chance, this may be an acceptable trade-off; but remember, this is an aging population, and innovation is not just a sport for the young. If you have a spouse with health benefits, you may be okay, but that puts enormous responsibility on the shoulders of one's partner to keep the job s/he's in, no matter how unhappy or unfulfilled it might be. COBRA works for awhile, if you can get it, but it has its own limitations. So too with the variety of packages for freelancers (if you can get them). The handful of remaining options -- including just going without -- can be amazingly expensive.

I don't think that there is necessarily a massive population of proto-entrepreneurs just waiting for universal health coverage in order to go out and change the world. I do think that there's a small number, however, which would then provide a model for people who might have long-ago discarded the idea of working for themselves. The lack of universal healthcare in the United States may well be a brake to the kinds of innovation and individual experimentation that will be necessary to adapt to a rapidly-changing economic -- and geophysical -- environment.

Just some thoughts on a Sunday afternoon, still in the midst of recovery.

(*The European experience provides neither strong support nor contradiction of this premise, given the substantial cultural and, often, legal differences regarding entrepreneurialism between the US and Europe.)


Interesting thoughts, Jamais. I personally am struggling with these questions as I'm seeing the end of my COBRA approach. Do I keep plugging away at a new business full-time like I have been or do I bite the bullet, find a paying gig with health care and go part-time on my personal stuff? It's a tough one.

Whatever the case, let's hope that the health care reform discussions currently making the rounds are here to stay and not just election-related bombast.

Feel better.

Our current third-party pays system where almost all of us get coverage via our employer is definitely a problem for the reasons that you describe above.

But, we don't actually need universal health care to solve this particular problem, and we definitely don't need single-payer. If we just got rid of the employer-based health care tax break and changed to a system where we all bought our own health care directly, the employee vs. freelancer issue would go away.

Of course, some form of universal health care could spur innovation even further if the risk equation doesn't work for potential entrepreneurs primarily because they are scared about the health-care implications if they fail (ie if they ran out of money to pay for health care, even if there were lots of good options available).

Single payer scares me because it's such a one-size-fits-all type thing when the next couple of decades should be bringing hyper-individualized medicine and, just like with the tech industry, we want lots of different people to be trying lots of different approaches (even if almost everyone else thinks they are insande) so that we find the breakthroughs that will inevitably come from somewhere we didn't expect.

But, we do definitely need to change the system one way or another though, the current way it works isn't good for anyone...

Health insurance was my single biggest challenge to figure out before launching my consulting business two years ago. And it is usually my single largest expense category each year.

I think you are right about the growth of entrepreneurs if worrying about health care is off the table. The current situation is a huge damper for anyone who isn't single and in their 20s.

From a foreigner's perspective your healthcare system is just amazing.

Down here we have both universal healthcare and private health insurance paid for by the individual rather than the employer.

If you make more than a set amount of money in a year the government slugs you with a higher tax rate unless you have private health insurance, just to slightly reduce the burden on the universal healthcare system from those who don't actually need it.

So no one ever goes broke when they get sick - it makes for a more efficient economy...


Creative Commons License
This weblog is licensed under a Creative Commons License.
Powered By MovableType 4.37