Health reform law will boost entrepreneurship and lessen Americans’ dependence on employment and employer sponsored health coverage
A major and not yet fully appreciated benefit of the Patient Protection and Affordable Care Act is it will boost entrepreneurship by giving would be entrepreneurs greater confidence to strike out on their own. At the same time, it will reduce Americans’ reliance on employment for both income and health coverage. Anything that will bolster the confidence of those looking to start new enterprises or work for themselves is a great thing as the economy crawls out of a deep and long recession.
The health reform law does so by two key mechanisms beginning January 1, 2014: 1) Barring health plans from using an individual’s medical history in deciding who to accept and the amount of their premiums and; 2) Creating in each state health benefit exchanges, providing budding entrepreneurs and self employeds an online marketplace of high quality health plans. Advance tax credits make coverage affordable by limiting how much they’ll have to pay for coverage until their incomes exceed 400 percent of the federal poverty level.
Being able to buy affordable coverage on their own through health benefit exchanges without having to rely on an employer sponsored health plan also correlates nicely with the growth of self-employed “free agents” such as Kansas City’s Mike Farmer, whose one-person company was profiled in this New York Times article. The Times cites Census Bureau data showing the number of nonemployer businesses like Farmer’s grew by 33.8 percent from 2000 to 2010. “I think we’re all headed toward an agent economy, where everyone becomes an agent or a service provider instead of an employee at some big corporation,” Farmer, whose mobile search app, Leap2, now has 10,000 users, told the newspaper. “That’s just how the world is evolving. It’s like telecommuting, but it’s taken to the level of telecompanies.”
Farmer’s reference to “telecompanies” has another name: virtual companies. Regardless of the terminology, Farmer’s onto something. Working for a large employer that requires a daily commute to an office building is increasingly becoming obsolete, courtesy of that great disrupter: the Internet. It makes self-employment far easier than it was just five years ago and reduces reliance on traditional employment for both income and health coverage. From a health perspective, that’s a virtuous trend, given indications that self-employed people are happier and healthier than traditional workers.
To the extent the health reform law makes it easier for Americans to earn their own incomes and not have to rely on an employer for health coverage and access to health care, it could well also be reinforcing healthier lifestyles over the toxic, sedentary commuter lifestyle that typically accompanies traditional employment and can lead to costly chronic health conditions. That’s a huge health reform in and of itself.