Consumer Watch: A shot in the arm for growth

Has President Obama finally found the argument that can help push a health insurance plan over the goal line - that revamping our quirky, employer-based health-care system will provide a crucial booster shot to the ailing U.S. economy?

Judging by the headlines, last week's big news on health care was pure Washington-insider stuff: The Congressional Budget Office projected that a key Senate health-care proposal would reduce the federal deficit $81 billion over the next 10 years.

It shouldn't have been. What may be more important in the long run - politically and to that looming deficit - is that the president is at last drawing a direct line between the nation's Swiss-cheese insurance system and the health of its engine of economic growth.

During his radio address last weekend, Obama made a connection that many entrepreneurs and economists have long thought overlooked: that our present system is an albatross around the economy's neck, because it discourages would-be entrepreneurs from starting businesses.

Obama focused mainly on how health insurance costs hurt existing small businesses, which he said pay 18 percent more than large companies for employee coverage.

But then Obama turned to something that's much harder to quantify but that may pose a far bigger economic problem: the effect on businesses that don't yet exist - or may never get started - because of our reliance on employers to provide health insurance.

"This is something I hear about from entrepreneurs I meet - people who've got a good idea, and the expertise and determination to build it into a thriving business," Obama said. "But many can't take that leap because they can't afford to lose the health insurance they have at their current job."

Obama's interest in that connection is welcome news to economists such as Jonathan Gruber, of the Massachusetts Institute of Technology, who argued in the Washington Monthly that universal access to affordable, reliable coverage could be a boon to entrepreneurship.

Hard evidence is limited, though one study earlier this decade projected that universal coverage could boost the proportion of self-employed workers in the United States by 22 percent to 39 percent.

A more recent study, by Rand Corp. and University of California economists, found clear evidence that people are more likely to take an entrepreneurial leap if they have access to health insurance through a working spouse or Medicare.

Even if its magnitude is unclear, Gruber calls the logic behind such a link "absolutely convincing."

One person who needs no convincing at all is Richard Wells of Bala Cynwyd.

For much of the last two decades, Wells worked for area hospital systems, most recently as vice president for public affairs at Main Line Health. Then he decided to take a risk.

Two years ago, Wells left Main Line Health to help form a consulting company, the Wellynn Group. And as he took the plunge, he was struck by a realization that hits many entrepreneurs: A key factor in his decision had nothing to do with whether he and his business partner could lure clients, provide valuable services, or build a thriving enterprise.

That factor was his wife's job as a Lower Merion teacher, a job that can provide his family with health insurance.

Wells, 50, and his wife, Maria, have three children. They were willing to risk his steady income and retirement contributions, along with the stability that comes with a job at a big business or institution.

But they weren't willing to gamble on their family's access to medical care. Though everybody is healthy now, Wells has worked in hospitals long enough to know that can change in the blink of an eye.

"Having that off the table was a huge advantage to me in starting the business," Wells says.

Wells is often struck by the illogic of America's employer-based health insurance system - "as if when you're unemployed you don't need health care anymore."

Wells wonders, as I do, why this issue hasn't played a central role in the health-care debate - an often-ugly fight taking place with the country in an economic hole and desperately in need of business start-ups and the jobs they provide.

To Gruber, last week's focus on the CBO's scoring of the Senate Finance Committee's health-care bill was more evidence of how easy it is to miss the forest for the trees.

Gruber, who sometimes crunches health-care numbers for the Obama administration, says the country will spend about $2.4 trillion this year on health care, and faces annual increases - if we don't fix the system - of about 7 percent.

"The way I like to think about this is, if we do nothing, the cost of health care this year will grow by about $150 billion," he says. "That's one year's growth, and we're fighting over way less than that in a 10-year score."

Gruber says those numbers could conceivably be dwarfed by solving what the Rand and University of California economists have dubbed "entrepreneurship lock."

"It's a highly uncertain effect," he says, "but has the potential to be enormous relative to anything we're talking about."

It's time it featured more prominently in our national debate.