Think starting and growing a business is hard work? Try doing it without health insurance. This 2017 electoral pivot and transition will see politicians on both sides of the aisle contesting the future of health insurance coverage in this country. Will they continue the policies of the current administration, roll them back, or seek compromise across party lines? No one really knows.
Today, entrepreneurs and want-to-be business-starters find themselves in a difficult limbo -- they don't have employers, so they aren't able to benefit from the traditional plans many full-time employees enjoy. They also face the ongoing threat that the Affordable Care Act (ACA or 'Obamacare'), which provides them with a safety net while they build and grow their companies, will be repealed. Obtaining independent coverage in the private markets, the way it was before the ACA, wasn't as seamless a solution as many believe it was. Insurance companies could deny coverage or provide it at painfully high prices. Unfortunately, because of gridlock within the two-party system, the future for innovators is uncertain and going out on their own is increasingly more risky. Some entrepreneurs are concerned that their time to build a business is limited and eventually they'll be forced to return to traditional employment.
The Successes and Failures of the Affordable Care Act
The Affordable Care Act, established in 2010, was the most significant piece of healthcare legislation to be enacted since Medicare and Medicaid over four decades ago. The ACA was intended to provide greater health insurance coverage and make health insurance more affordable to people not covered by traditional plans. It established the Healthcare Marketplace and exchanges which offer a wide-array of plans with subsidized coverage, including for people who could be denied coverage from private plans. It was expected that because younger, healthier people would be paying into the program, it would lower Medicare spending and reduce future deficits.
At the outset, it seemed like a good proposal. Tens of millions of people would have access to healthcare who ordinarily wouldn't. People who wished to separate from their existing employment or start a business could do so without worrying about a lapse in coverage. Those on the lower-end of the income spectrum would have their premiums subsidized to make them more affordable. As long as enough people participated in the marketplace, the economics could work.
But since its inception, there has been tremendous push-back and disapproval. The arguments among many have been: 1) more affluent people are subsidizing those without the economic means; 2) the healthy and young subsidize the sicker and the elderly; 3) there are far more sick people than originally anticipated; 4) insurance premiums are not as affordable as hoped for and continue to escalate; and 5) the marketplace is inefficient and doesn't encourage free competition to lower premiums. These arguments, many of which are legitimate, have become ammunition for those who want to completely repeal the ACA. In my experience, though limited to who I speak to within my network, most of the people who are opposed to the ACA are people who aren't enrolled in the Healthcare Marketplace and don't benefit from the ACA at all; they are traditionally employed with employer-sponsored plans, are on Medicare, or have the economic means to obtain coverage they need and want through private channels.
My Personal Experience With the Affordable Care Act
For three years, after the inception of my businesses, I was a participant in the Healthcare Marketplace established by the ACA. I paid nearly $300 per month in premiums and paid 100% of my expenses out-of-pocket until I crossed the high deductible (ranging from $4,500 to $6,500 each year). Thankfully, my dental premium was under $30 per month and the deductible was far lower than my general healthcare deductible.
Trying to understand the plans and coverage through the Marketplace's user-interface was extremely confusing. With hundreds of plan choices, it seemed impossible to make effective comparisons. At a loss for how to make a decision, I confided in three other business-starters in my network. I was at a loss to learn that two of them were married to women with traditional jobs, whose employer-sponsored plans covered them as well. And the third business-starter was given a favor, being documented as an employee in a friend's business. So it was only through unique circumstances that these three were covered. I, on the other hand, was not married nor did I have friends or family who could sweep me onto their payrolls. Thus, for three years of business-building, like many other entrepreneurs across the country, the ACA was my safety net.
Unfortunately, my personal savings and the income from my businesses were too healthy to receive subsidies from the state exchange to reduce my monthly premiums. Because I was traveling a lot for work and leisure, I was forced to juggle insurance covered through the Healthcare Marketplace as well as overseas travel insurance. Ironically, the overseas travel insurance called for a very modest monthly premium yet had far better medical and dental coverage than my ACA plan. Never before had the idea of 'medical tourism' even crossed my mind -- but it was striking how much better my coverage was overseas than it was in my home country.
I'll openly admit I did not like having to participate in the ACA for the three years I needed it, but my clear option before the enactment of the ACA was to self-insure through a private company which had expensive premiums and even worse coverage. My short-term participation in a catastrophic plan, which bridged my employment gap between jobs, only protected me in the event of a serious illness or accident. Visits to doctors offices cost hundreds, and in one instance, thousands of dollars. The preferred choice of far too many Americans, foregoing insurance altogether to save money, was an irresponsible option.
My three years on the Healthcare Marketplace eventually came to a peaceful conclusion as I too became one of the lucky ones. After four-and-a-half years courting my wife, she and I got married. The marriage came with many perks, including a corporate-sponsored health insurance plan with spousal coverage. Having a partner who happens to have a corporate job with benefits served me well, but it isn't the enduring solution most entrepreneurs are looking for.
Where Do We Go From Here?
I believe most of us would agree, no matter what our political affiliation, whether Republican or Democrat, allowing virtuous people to innovate and create jobs is in the best interest of us all. It's a cornerstone of American business. Startups become small businesses and small businesses become mid-sized and large companies that employ tens of millions of people across the country. The success of these establishments is core to our country's economic success and culture. For me, it's also the foundation of what keeps the American Dream alive.
Many friends and colleagues have expressed to me their desires to leave traditional employment and go out on their own. Compared to other generations in the workplace, Millennials express the strongest desire to start their own businesses. When I speak with young professionals, some feel locked into their mind-numbing, task-driven jobs and crave the opportunity to venture into something outside of corporate America. What's the main motivation why many stay put: to preserve their company-sponsored health insurance.
We shouldn't make it unnecessarily more difficult to start a business or pursue an entrepreneurial dream. Starting a business -- any business -- is a risk-filled endeavor, even WITH health insurance. Have babies or children...it's even harder. Without insurance...it's insanity. I worry that the incoming leadership's strong desire to immediately and swiftly repeal the ACA, without a clear plan to replace it with something comparable or better, will remove the safety net that was so critical for me and many entrepreneurs when we started our businesses. For me, the ACA offered security so I could focus on building my businesses without having to worry about how to pay for a major illness or injury. I'm concerned that without an enduring option for health coverage, many would-be business-builders won't be willing to even take the first step in getting their businesses off the ground. To me, that's a very sad reality.
In its current form, the ACA is neither universally affordable nor economically sustainable. It's expensive, confusing, and offers less-than-stellar coverage. It's far from perfect. Yet, it's the least-bad option we have, at least for now. The solution is not a swift repeal; the solution is a gradual improvement. Despite its faults and shortcomings, the ACA has been an excellent platform for entrepreneurship and innovation. It has provided basic protection for people seeking to venture out on their own. Addressing this issue in a productive way will require innovative thinking among our lawmakers and their desire to seek compromise, rather than pursue all-or-nothing policy. Our country's business future depends on it.
