Employer-Based Health Insurance Discourages Entrepreneurship

That is the finding of a new study by the Rand Corporation. By examining business ownership among workers with and without a spouse's health insurance coverage and with and without Medicare coverage, researchers at Rand discovered what they call an "entrepreneurship lock." Business starts are suppressed by workers' dependence on employer-based health insurance.

People with access to a spouse's health insurance plan are more likely to become self-employed than those who do not have this health insurance alternative, according to the results of the study. Self-employment also rises when people turn 65 and become eligible for Medicare and no longer need employer-based health insurance. In fact, self-employment rates jump up in the very month people turn 65.

The researchers conclude that "the bundling of health insurance and employment may create an inefficient level of business creation."