Health reform law could increase entrepreneurship, report

June 12, 2013
by Loren Bonner, DOTmed News Online Editor
If you've ever wanted to start your own business, 2014 might be the time to act. A new report from the Robert Wood Johnson Foundation estimates that the number of self-employed Americans will be 1.5 million higher in 2014, the year that everyone is required to carry insurance under President Obama's health care reform law.

The report, published May 31, concludes that because health insurance will no longer be exclusively tied to employment, this could lead people to pursue their own businesses as self-employed entrepreneurs.

According to the report, many Americans who have wanted to leave their jobs have instead felt tethered to them for fear of being denied health insurance coverage because they have a preexisting medical condition or because they would be unable to afford expensive premiums. But several important provisions in the new law seek to reverse this. For one, no applicant can be turned down because of a preexisting medical condition, which is a medical condition that a person has before applying for insurance, and that many insurance companies use as a reason to deny insurance coverage. Also, individuals can't be charged higher premiums because of their health status. As far as costs are concerned, the law sets up state health insurance exchanges where consumers will be able to shop for affordable, comprehensive coverage. Medicaid expansion in some states will provide coverage to those with low incomes. And tax credits will be available to low or moderate income individuals and families to help reduce the cost of premiums.

According to a new brief from the health care consulting firm Avalere Health, most young adults enrolling in the state health insurance exchanges — those not expected to qualify for Medicaid — will be eligible for subsidies, or premium tax credits too. This will be welcome news to many.

"Having access to affordable insurance on the open market is what millions of people need to become their own boss," said Andy Hyman from the Robert Wood Johnson Foundation, in a statement.

In the report, researchers also pointed to empirical research that shows a significant increase in self-employment in states that have already initiated some health reforms.