At my commencement ceremony from the Humphrey Institute a couple of years ago, former Vice President Walter Mondale addressed the graduating class. He apologized on behalf of the previous generation of American leaders for the country’s present state of student loan debt.
He said that when he and his peers graduated from law school many years ago, the world was full of opportunity. Free of immediate financial responsibility, his peers could travel, start a business or a nonprofit — hell, they could afford to work for a nonprofit, or intern for a company — living on a meager salary or a part-time job as they gained work experience. They could put their university-enhanced imagination to work to solve great problems. His point was that starting fresh is a gift that goes straight to the heart of innovation.
Politicians today spend a lot of time talking about roadblocks for entrepreneurs. They focus wholly on regulation — the costs of permits, complex tax preparation and health insurance forms.
Certainly, these things are troublesome, perhaps sometimes a complete hindrance, for an entrepreneur in any field other than accounting; imagine a carpenter, dentist or dry-cleaner trying to navigate this minefield of paperwork. But there is another equally perilous obstruction to entrepreneurialism that is almost completely left out of this routine debate over job creation: The perilous relationship of health insurance and the American job.
There are many differences between students today and Mondale’s peers. The average student leaving university with an undergraduate degree today – forget graduate or law school — carries (along with their micro-fridge, used economics textbooks and French poetry) a $26,000 loan debt.
Beyond saddling graduates with debt and too little time to gain both experience and sufficient cash flow to qualify for a job that pays well enough for rent, student loans and health care, let along the financial space to innovate, our country’s health care insurance system imposes on them the further hindrance of a mandatory 40-hour workweek, leaving little time or energy for creative output.
Of course, insurance is relatively inexpensive for youngsters, and enterprising ideas are hardly the sole province of the young, so take a 30-year-old with one or two young children, a professional spouse, and nearly a decade of work experience. Through observation of her firm’s business, perhaps this enterprising mother identified a niche opportunity that would make a good startup.
Suppose she’s hardy enough to navigate the regulation, and suppose her spouse is able to devote more time and money to the family. As soon as she drops below full time at work, she will lose her family’s health insurance, and it is statistically unlikely that both she and her spouse have jobs with affordable family health insurance, and even more unlikely that her spouse’s income could possibly cover both her loss in wages — now that she’s part time — and the family’s loss of insurance.
What if she were single? What if she had a health condition, an ailing parent or child? What if she were a little older? (The cost of insurance at 50 is sickeningly greater than at 30.)
This means that entrepreneurialism in America, the Land of Opportunity, is becoming solely the province of the young, rich, healthy and illogical. By tying health insurance to full-time employment, we have made entrepreneurialism devastatingly unlikely, because even those who could afford to live on, say, a 25-hour workweek must also forfeit affordable insurance.
The solution here certainly doesn’t have to be state-run health care, and it really doesn’t even have to include state-sponsored health insurance. At the end of the day, health insurance, like all insurance, rests on the premise of pooling risk, and the larger the pool, the lower the risk — this is why insurance for small businesses is so much more costly than for large businesses.
Even without taxpayer subsidies, this is a main reason why state-managed health insurance is immediately cheaper than private insurance: It’s the largest possible pool.
Health isn’t an end, it’s a means. Health isn’t your life, it enables your life, and it enables your work. It’s unfortunate that in America, and pretty much only in America, health care disables your work.
Andrew Finken, of Washington, D.C., is a health care program analyst. His is a graduate of the University of Minnesota’s Humphrey School of Public Policy and Affairs.