Assessing the Impact of Health Care Reform on New Businesses In Massachusetts

A couple of weeks ago, when The Agenda discussed Jon Stewart’s musings on creating a safety net for entrepreneurial risk-taking, we touched briefly on how health insurance reform might spur people to go out on a limb and open a new business. “What about the risk of, you’re afraid to leave your job and be an entrepreneur because that’s where your health insurance is?” Mr. Stewart asked his “Daily Show” guest, Austan Goolsbee, the former Obama administration economist.

That led to this question from an Agenda reader, Joyce Carpenter, who wrote that she lives near Boston: “Is there any data from Massachusetts to show that Romney-care a k a Obama-care would help mitigate the risk and encourage entrepreneurship?” Excellent question, Ms. Carpenter, and one we’ll explore here. (Spoiler alert: the answer will be disappointingly murky.)

To begin to answer the question, you have to know first whether the health insurance legislation signed by Governor Mitt Romney in 2006 has in fact lowered the cost of individual insurance in Massachusetts enough to make it attractive to prospective entrepreneurs. That is according to Yasuyuki Motoyama, senior scholar at the Ewing Marion Kauffman Foundation, which focuses on issues related to entrepreneurship. For this, Mr. Motoyama referred us to a study of the Massachusetts health insurance market by economists John Graves of Vanderbilt University and Jonathan Gruber of MIT. (As an adviser to then-Governor Romney, Mr. Gruber helped devise the Massachusetts health reform law.)

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