---
created_at: '2013-08-10T15:59:45.000Z'
title: Is Employer-Based Health Insurance A Barrier To Entrepreneurship? (2010)
url: http://www.rand.org/pubs/working_papers/WR637-1.html
author: ScottBurson
points: 59
story_text: ''
comment_text: 
num_comments: 84
story_id: 
story_title: 
story_url: 
parent_id: 
created_at_i: 1376150385
_tags:
- story
- author_ScottBurson
- story_6191512
objectID: '6191512'

---
The focus on employer-provided health insurance in the United States may
restrict business creation. The authors address the limited research on
the topic of "entrepreneurship lock" by using recent panel data from
matched Current Population Surveys. They use difference-indifference
models to estimate the interaction between having a spouse with
employer-based health insurance and potential demand for health care.
They find evidence of a larger negative effect of health insurance
demand on business creation for those without spousal coverage than for
those with spousal coverage. They also take a new approach in the
literature to examine the question of whether employer-based health
insurance discourages business creation by exploiting the discontinuity
created at age 65 through the qualification for Medicare. Using a novel
procedure of identifying age in months from matched monthly CPS data,
they compare the probability of business ownership among male workers in
the months just before turning age 65 and in the months just after
turning age 65. They find that business ownership rates increase from
just under age 65 to just over age 65, whereas they find no change in
business ownership rates from just before to just after for other ages
55-75. They also do not find evidence from the previous literature and
additional estimates that other confounding factors such as retirement,
partial retirement, social security and pension eligibility are
responsible for the increase in business ownership in the month
individuals turn 65. Their estimates provide some evidence that
"entrepreneurship lock" exists, which raises concerns that the bundling
of health insurance and employment may create an inefficient level of
business creation.

The research in this report was conducted by the Kauffman-RAND Institute
for Entrepreneurship Public Policy within the RAND Institute for Civil
Justice.

This report is part of the RAND Corporation working paper series. RAND
working papers are intended to share researchers' latest findings and to
solicit informal peer review. They have been approved for circulation by
RAND but may not have been formally edited or peer reviewed.

Permission is given to duplicate this electronic document for personal
use only, as long as it is unaltered and complete. Copies may not be
duplicated for commercial purposes. Unauthorized posting of RAND PDFs to
a non-RAND Web site is prohibited. RAND PDFs are protected under
copyright law. For information on reprint and linking permissions,
please visit the [RAND Permissions](/pubs/permissions.html) page.

The RAND Corporation is a nonprofit institution that helps improve
policy and decisionmaking through research and analysis. RAND's
publications do not necessarily reflect the opinions of its research
clients and sponsors.
