The number of newly minted entrepreneurs in Ohio would rank fourth nationally behind California, Texas and Florida, and the total number of self-employed Americans could grow by 1.5 million next year when the states open their online marketplaces for health insurance under the health law, the nonpartisan Washington, D.C.-based think tank predicts.
“Many individuals who may be working for firms today who would like to start their own business are locked in to where they are employed now as a consequence of needing health insurance,” said Linda Blumberg, senior fellow and lead researcher at the Urban Institute. “The ACA levels the playing field so they don’t have to worry about whether they can afford to give up their health insurance.”
Blumberg and her colleagues used combined 2011 and 2012 Current Population Survey results to establish a baseline for self-employment in each state. Then they projected the growth in those numbers based on self-employment trends in states that already have adopted rules similar to the health care law — including rules that prohibit insurers from discriminating against people with pre-existing conditions and capping premiums for the sickest enrollees.
For some Ohioans, health insurance premiums would rise compared to what they would pay for individual coverage in the private market today, based on an analysis by the Ohio Department of Insurance. The state agency found the average cost to provide individual medical coverage on Ohio’s exchange could be as much as 88 percent higher than current rates, and premiums are likely to closely track the increase in costs. Ohio is among 27 states that have decided to let the federal government operate the exchange rather than setting up their own exchanges.
But the premium subsidies to help pay for their coverage — available through the exchange to anyone earning under 400 percent of the federal poverty level ($45,960 for singles; $92,200 for a family of four) — would substantially offset the cost burden, said Amy Rohling McGee, president of the Health Policy Institute of Ohio.
“And people who have pre-existing conditions, such as cancer, heart conditions or even more minor conditions, will have access to insurance in the individual market when that coverage has been limited, not offered, or too expensive in the past,” Rohling McGee said, noting that she had trouble finding affordable health coverage when she first struck out on her own as a consultant.
“I know from personal experience that people can be denied coverage or charged very high premiums for very minor health problems,” she said.
Pursuing a dream
Lisa Scott, who owns the Beaute Box day spa in downtown Dayton, assumed the risk of “going naked” — an industry term for going without insurance — when she launched her business in November 2011.
But Scott refused to let the prospect of forfeiting the “wonderful” health benefits she had as a Sears Home Improvement employee stop her from pursuing her goals.
“It would have been that much easier for me if I didn’t have to worry about insurance,” she said. “But sometimes you just have to go for it.”
Still, working for an established company offered her “the kind of peace of mind you don’t get when you’re out on your own.”
“When you’re with a big company they just make it easy,” she said. “When you’re on your own, you have to make all the decisions yourself and that can be overwhelming.
“If I have to go to the doctor, I just pay out of pocket,” she said. “But that means anything I need to buy for my business I have to put on hold.”
Scott said she’s not as familiar with the federal health care law as she thinks she should be. But she said she “will absolutely consider signing up for it” if it offers her health insurance at a reasonable cost, because it would eliminate one of her biggest fears — having to pay for a major health crisis that could sink her business because it’s her only source of income.
Some people try to side-step the dilemma by starting a business part-time, said Arnold Sandness, a seasoned counselor at the Dayton Chapter of SCORE, a national network of experienced entrepreneurs and corporate managers who offer free advice on starting a business.
But that strategy has its own drawbacks.
“We see people all the time who want to be their own boss, have more flexible working hours or just do something they really enjoy doing to make money,” Sandness said. “But they want to do it on the side because they don’t want to give up their health insurance.
“That has been somewhat of a handicap because you can grow your business a lot faster by dedicating yourself full-time,” he said. “But the concern about having to provide their own benefits can keep them from realizing their full potential.”
Sandness said the concern is generally greatest among middle-aged and older workers who probably have the best chance at success.
They typically have the capital and the managerial skills required to start a business, he said, but they’re also more likely to have trouble securing health insurance and also typically have dependents who rely on their company health plans.
“It’s tough for a family man or woman to give up that kind of security,” Sandness said.
That comes as no surprise to Urban Institute researchers.
“The evidence shows that older adults or adults that have had health problems in the past are substantially less likely to start their own businesses because they’re more worried about the risk of losing their health insurance,” Blumberg said. “Many young people are already starting businesses because they have at least the luxury of deluding themselves that they don’t need insurance or can already get affordable health care because they’re young and healthy.
“It’s the people you don’t see now, languishing in jobs that don’t fit their skill sets that are going to benefit the most from the ACA,” she said.
By Randy Tucker - Dayton Daily News, Ohio (MCT)
©2013 the Dayton Daily News (Dayton, Ohio)
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