For Self-Employed Entrepreneurs, Losing The ACA Would Be An Enormous Setback

Health Affairs

Lawmakers who dream of gutting the Affordable Care Act (ACA) do not seem to care about its importance to small business owners, particularly those who are solo entrepreneurs. What these politicians fail to understand is that the health care law is the first meaningful insurance reform available to entrepreneurs in decades. In fact, for many self-employed business owners, their firms would not exist without it. That’s why repealing the law is going to be a sizable setback for entrepreneurship.

One of the most popular and best-known provisions of the ACA has been particularly important to solo entrepreneurs: the prohibition against denying coverage to anyone because they have a pre-existing condition. Before the ACA, many aspiring entrepreneurs were unable to leave their jobs and start new ventures because a pre-existing condition meant they could not get coverage on their own, so they were stuck working for someone else. Others simply went without insurance. According to the Employee Benefit Research Institute, 30 percent of the nation’s 22 million self-employed were uninsured in 2011 — a rate more than double that of the general population.

The ACA has been (and should continue to be) particularly impactful for entrepreneurs. A report issued recently by the Treasury Department and the U.S. Department of Health and Human Services found that one out of every five ACA marketplace enrollees in 2014 was a small business owner, self-employed, or both. Two years later, the numbers continued to improve: a survey conducted by the Kaiser Family Foundation in early 2016 found that 31 percent of non-group health insurance enrollees were self-employed. What’s more, in 2013, The Robert Wood Johnson Foundation estimated that the number of self-employed Americans would increase by 1.5 million, thanks to the ACA.

Statistics are certainly illustrative of macro trends in health care, but they don’t always tell the whole story. In this case, they don’t show what it’s like on the ground for entrepreneurs who would likely not be in business without the ACA.

Consider the case of Howard Paul, who now owns his own photography business in Colorado. Howard was a professional photographer before working as an Emergency Medical Services (EMS) first responder for more than 30 years. Despite longing to return to photography full time, he struggled with the thought of leaving his EMS job, mainly because he was afraid to sacrifice the security of his employer-subsidized health coverage.

Then the ACA radically expanded the insurance options available to people looking to purchase coverage on their own, without an employer group. In 2014, Howard purchased health insurance through Colorado’s health care marketplace, Connect for Health Colorado. With quality, affordable health coverage secured for himself, he finally had the courage to open his own photography business.

The ACA helped Howard immediately, as he gained access to increasingly more affordable health coverage. For example, Howard’s insurance premiums dropped by a whopping 71 percent from his first year using the Colorado exchange to the second year. Although he did experience a modest increase in premiums for 2017, his total annual out-of-pocket expense dropped more than $4,100 from 2014 through 2016.

The ACA may ultimately do more than allow Howard to launch a new business: it may also save his life. Howard was diagnosed with advanced prostate cancer in December 2016. Without the coverage he purchases through the state’s health care marketplace, Howard would be unable to pay for his medication out of pocket. He fears that if the ACA prohibition against denying coverage to those with pre-existing conditions ends, he will lose his business and the health coverage he desperately needs. This is why repealing the law, particularly without a comparable replacement plan, would be devastating for people like Howard, both personally and professionally.

Without the ACA, there will be fewer Howards who start their own businesses, resulting in fewer jobs. That’s why anyone who tells you that the ACA is a “job killer” is flat wrong. After all, entrepreneurship drives our economy; America’s 28 million small firms account for 49.2 percent of all private-sector employment in this country. Instead of ending a program that is working for entrepreneurs, seemingly out of political spite, lawmakers should strengthen the ACA to help Howard and everyone like him, so that millions of Americans can keep their jobs and continue to have new opportunities.

Author’s Note

Howard Paul is a real business owner who graciously agreed to let the author use his name and story for this Blog post.

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