Obamacare a Boon for Small Business?

Yes, or so says James Surowiecki of the New Yorker:

Of the countless reasons that congressional Republicans hate the Affordable Care Act enough to shut down the government, the most politically potent is the claim that it will do untold damage to the economy and cripple small companies. Orrin Hatch has said that Obamacare will be “devastating to small business.” Ted Cruz argues that it is already “the No. 1 job killer.” And the vice-president of the National Federation of Independent Businesses called it simply “terrible.” So it comes as some surprise to learn that Obamacare may well be the best thing Washington has done for American small business in decades.

The point is that private insurance market for health care, plagued by adverse selection was a huge obstacle faced by small businesspersons.  My brother is an example.  He ran is own Silicon Valley business for years until the cost of insuring himself, his wife and his kids was simply too costly to continue so he went to a corporate salaried job that came with an employer-provided health plan.

How big an effect will this be for the US economy?  Hard to say, but Surowiecki claims it will be large:, "our small-business sector is among the smallest in the developed world, and has one of the lowest rates of self-employment."  It is often argued that entrepreneurialism is a key factor in economic growth, if so this could have a substantial impact.  I am not equipped to judge.

To me, this was a interesting little historical tidbit that had heretofore escaped my attention:

The fact that most Americans get their insurance through work is a historical accident: during the Second World War, wages were frozen, so companies began offering health insurance instead. After the war, attempts to create universal heath care were stymied by conservatives and doctors, and Congress gave corporations tax incentives to keep providing insurance. The system has worked well enough for big employers, since large workforces make possible the pooling of risk that any healthy insurance market requires. But small businesses often face so-called “experience rating”: a business with a lot of women or older workers faces high premiums, and even a single employee who runs up medical costs can be a disaster.

I had not read this account of employer-provided health care. Not that it matters much for the current debate - it is pretty clear that we have an inefficient patchwork health care system whatever the origin.