Why California’s ‘gig economy’ could be hit by Obamacare repeal
SACRAMENTO — On a recent Friday at Old Soul Coffee Roasters, actor Ian Hopps hunched over his laptop as he edited a flier for an upcoming performance with the Davis Shakespeare Ensemble. He had just come off a shift from the East Sacramento restaurant where he waits tables and was killing time before his curtain call for “The Tempest” later that evening.
The 26-year-old lives paycheck to paycheck as a freelance actor/parttime server and doesn’t get health benefits through either position, he said. After turning 26 and becoming ineligible for his parents’ insurance, he enrolled in a Medi-Cal plan, made available only after the Affordable Care Act became the law of the land in 2010.
With private insurance out of his price range, Hopps said he was relieved to have an accessible option and not have to “bite the bullet” of taking on a full-time job for benefits. As Medi-Cal and other federal health programs face an uncertain future, part-time and self-employed workers such as Hopps wonder how they’ll pursue their careers, and stay covered, if the law is repealed.
“I love getting to work gig to gig, because it allows me the freedom to pursue other projects on the side,” he said. “If I had to work a 9 to 5 just for the benefits, I wouldn’t be able to do as much as I do . ... I’d probably just keep gigging and hope I don’t get sick.”
More than any other state, California embraced former President Barack Obama’s Affordable Care Act, expanding eligibility for the lowincome Medicaid program to childless adults and creating the Covered California exchange, which offers subsidized plans to people who can’t afford private insurance. About 3.7 million people have enrolled in Medicaid since the health law was implemented, and 1.3 million now have plans through Covered California.
While that expansion brought in many people living near or below the poverty line, it also includes independent workers in the so-called “gig economy” — a growing class of professionals who patch together income from multiple jobs. The sector has thrived as sharing economy companies such as Uber, TaskRabbit and Thumbtack draw more people to driving, tutoring, freelance software design and other services. The majority of those workers are not entitled to employee benefits, including health care.
More than 3 million people in the U.S. are classified as independent workers, according to estimates from the U.S. Census Bureau. From 2004 to 2014, self-employed people working in repair and maintenance, personal and laundry services, pet sitting and other jobs belonging to the census bureau’s “other category” grew by nearly 1 million people, or 31 percent, according to bureau data.
A Republican proposal to repeal and replace the Affordable Care Act now puts in danger the health insurance of independent workers who received Medi-Cal through the federal expansion. The proposal also seeks to replace the Covered California subsidies, based on age, income and location, with tax credits based primarily on age.
The credits likely won’t go very far in covering high medical costs and premiums in Northern California, said Gerald Kominski, director of the UCLA Center for Health Policy Research. The nonpartisan Kaiser Family Foundation estimates that Sacramento County residents will see on average about a 15 percent reduction in tax credits with the GOP plan.
A February study from the UC Berkeley Labor Center found that about 25 percent of restaurant and food service workers could lose coverage in the event of a federal health law repeal, as could 22 percent of auto mechanics, hair stylists and people classified in the study’s “other services” category. Businesses employing fewer than 50 people are not required by current law to insure their employees, and larger businesses must insure only their fulltime workers.
Stride Health, a San Franciscobased company that helps people in the gig economy find insurance plans, estimates the number of people in the sector is even higher. The company serves about 5 million workers in the U.S., about a third of whom are in California, said CEO Noah Lang.
“The Affordable Care Act empowered individuals to break away from traditional work and build an independent career — whether that’s freelancing or driving for Uber or starting their own business,” Lang said. “It’s removed for them the worry of ‘Where am I going to get coverage for me and my family, and how much is it going to cost?’ “
About 14 percent of California workers ages 18 to 64 are insured either through the Medi-Cal expansion or a private plan purchased on a Covered California exchange with subsidies, according to the UC Berkeley study. Some work as independent contractors in the gig economy, while others are part-time employees in food service, retail, agriculture and education.
Mehran Mesbah, a visual artist and an adjunct professor at California State University, Sacramento, said he only gets coverage through the school when he’s teaching two classes — usually about half the year. When he’s bumped off his Blue Shield plan, the 37-year-old purchases a temporary plan through Covered California so he’s insured while he works other jobs including construction and freelance sculpting.
“I’m definitely in a jack-of-alltrades situation,” he said. “For the most part I could see doctors on that, and I could see doctors on Covered California. It was nice to have that year-round.”