Health reform needed to boost productivity.

Always knew I'd start posting about health reform at some point. Here's my first take (more to come) on how to think about health care reform. Why do we need it, and what kind of reform do we need?
Obama's people talk about the need for health care reform as a budget and cost issue. That may or may not be true, depending on the details of the reform itself. One thing they should be emphasizing, though, is that universal health care coverage, if it was no longer dependent on employer sponsored plans, would provide a tremendous boost to our national productivity. And, productivity increases are what we need if we are ever to work our way out of our deficit problems.
I bet that you know someone -- maybe yourself --who has been trapped in a job out of fear of losing health insurance. That "job-lock" is a major deterrent to new business starts. And, jumping ship from a large bureaucracy-bound corporation to a small business is often hard because many small businesses don't provide adequate health insurance. When workers' employment choices are so biased, they exact a cost in lost productivity (the difference in the value of what they could be producing if they weren't constrained and the value of what they actually are producing in their less-than-optimal job). The current employment-based system also is biased in favor of big companies and against small companies. (That's why many small businesses don't offer health insurance.) Big companies have the scale and resources to pool risks across a wide range of enrollees and drive a hard bargain with prospective health insurers for low premiums. And, they generally pay 35% marginal tax compared with, say, 28%, for small proprietors, so they get a bigger tax break from deducting health care premiums. So, it's less costly, per enrollee, for large companies to provide health coverage than for small ones. As a consequence, large companies can offer lower total compensation (wages + benefits) than small companies can for the same skill level.
So, the current system biases employees against smaller, more entrepreneurial ventures, and rewards larger firms at the expense of smaller ones. Both of those biases waste resources and lower our overall productivity as a country.
Bottom line: we need universal access to health care, unrelated to employment, as a boost to our economic productivity. To go deeper into this subject, see a very good summary by Elizabeth Jacobs, a Congressional Fellow.
Next post on this subject: what should the reform look like?