Health care headlines have dominated for more than a week now. And yet the dialogue still seems many steps removed from how all of these proposed changes will help/hurt small, growing businesses.
This blogger has done anything but ignore the impact of socialized medicine on small business. My post yesterday stressed again the negative impact it would have on job creation due to increased costs and the healthcare mandate that would be faced by any small business with over 25 employees. I have also warned of the negative impact that higher marginal tax rates necessary to pay for national healthcare would have on entrepreneurs -- on their start-up rates, their exit plans, and their growth strategies.
The interesting thing to me is the steady chorus of small business owners who say that they want nationalized healthcare. They seem to be taking the short-sighted perspective that this will take one more hassle off their plates.
Here is my warning to them.
There is an even greater danger to supporting this plan. It is one more step to diminish our property rights. Nationalized healthcare would be yet the next step down the road to reaching the tipping point of moving from a capitalistic economy to a socialized economy. It is one more step toward moving basic property away from private ownership to becoming public goods to be doled out by bureacrats and politicians.
Ultimately entrepreneurship is based on a system of property rights and liberty. The move toward socialization of healthcare -- and banking, and manufacturing, and insurance, and mortgages -- is eating away at the foundations of entrepreneurship like a cancer.
Dr. C, as a former student and long-time devoted reader of your blog, I usually agree with 99% of what you have to say about entrepreneurship. When it comes to health care, however, I just don't understand how one can argue that capitalism is good for the delivery of medical services. We have tried using capitalistic methods to meet societal demands for the delivery of health care for over 70 years now and, by almost every measurable statistic (lack of patient coverage, out-of-control costs, inefficiencies, pre-existing condition/recision clauses leading to more and more personal bankruptcies, etc.) it has been an abysmal failure. If I were to take your comments to the one extreme about "socializing health care", then we should all be demanding that those basic services (education, defense, highways, parks, etc.) used by the majority of our citizens (e.g. health care) should be privatized in order for us to have a truly free and democratic society and a fair and just economic system. The bottom line here is that the "business of health care" has started to strangle the U.S. economy and it's only going to get worse if we keep embracing capitalistic solutions. For a well-researched and balanced business perspective of the health care industry, I'd highly recommend the following article that appeared in Business Week in 2006: http://tinyurl.com/krfggn
Keep on rockin' in the free world!
Dr. Cornwall,
I agree with your stance in regards to this post. I recall Vic Alexander's lecture earlier this semester in which he states that all entrepreneurs, at the end of the day, want to make a profit so inevitably they can sell their business. The Obama Administration seems to look down upon anyone making a substantial income in one sitting so to speak. As you have stated small businesses make up close to 50% of the businesses in the United States in the current economy. If healthcare reform is passed, the higher tax rates would further suffocate the small business market, making it more difficult and less enticing for entrepreneurs to pursue business ideas.
In respects to healthcare, a reform to a more public system would discourage innovation, in my opinion. From an economic standpoint, it would be interesting to see what happens to the private sector in relation to GDP growth if public insurance is the new standard. I would venture to say the sector would decrease significantly, thus companies closing their doors. What of unemployment then?