Innovation and Healthcare Reform

As I’ve noted before, we hear a lot about how the wrong kind of healthcare reform (i.e., government-run healthcare) would stifle innovation.  What we don’t hear enough about is how lack of affordable healthcare stifles innovation in the broader economy.  Today’s Wall Street Journal took a look at the problem:

At some businesses, in fact, health care is the highest expense after salaries—with devastating consequences. Owners must skimp on vital investments like marketing and research. Some can’t hire the people they want because top candidates demand premium coverage. Or they end up understaffed because of the high cost of insurance—and lose potential clients as a result.

At the same time, to keep costs in check, countless companies are slashing coverage or dropping it entirely. Some are turning to freelancers or offshore workers instead of hiring full-timers and locals. And some would-be entrepreneurs find insurance so onerous that they’re not even starting a business in the first place.

What’s more, it isn’t just individual companies at risk. It’s the entire economy. Historically, small businesses have boosted recoveries significantly. Since they can’t simply make mass layoffs and hunker down, as so many big companies do, they must take risks to survive—like investing in innovative ideas and hiring more workers to implement them. But stratospheric health-care costs threaten to damp that enthusiasm and choke off investment.

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