Self-em­ployed fear re­peal­ing ACA will bring back ‘job lock’

Modern Healthcare - - NEWS - By Har­ris Meyer

Joshua Lapp left a full-time job with health ben­e­fits in 2014 to launch an ur­ban plan­ning firm with two part­ners. Colum­bus, Ohio-based De­sign­ing Lo­cally has grown rapidly, with projects all over the county.

There’s no way Lapp, 27, would have con­sid­ered start­ing his own busi­ness be­fore the Af­ford­able Care Act took ef­fect be­cause he has a con­gen­i­tal heart con­di­tion. He was able to buy a health plan through the fed­eral ex­change, which costs him $300 a month. He hasn’t had to worry about in­sur­ers deny­ing him cov­er­age—as they could be­fore the law—for his con­di­tion, which re­quires a $100,000 op­er­a­tion ev­ery five to 10 years to re­place his car­diac pace­maker.

His two busi­ness part­ners and their sig­nif­i­cant oth­ers also have ACA cov­er­age as self-em­ployed peo­ple. “Be­ing able to buy my own af­ford­able plan on the ex­change al­lowed me to step out on my own,” he said. “It’s a big en­abler for all of us.”

But now Lapp is deeply worried about the push by Pres­i­dent-elect Don­ald Trump and con­gres­sional Repub­li­can lead­ers to rapidly re­peal the ACA and then craft a re­place­ment sys­tem over the next sev­eral years. He’s par­tic­u­larly ner­vous about whether the in­di­vid­ual mar­ket he de­pends on will col­lapse in the in­terim, and whether Repub­li­cans will ad­e­quately re­place the ACA’s ban on in­sur­ance dis­crim­i­na­tion against peo­ple with pre-ex­ist­ing con­di­tions like his.

He and other young en­trepreneurs don’t like that the GOP re­peal-and-de­lay strat­egy will leave them hang­ing in in­sur­ance limbo for sev­eral years. “If it’s re­pealed, I might have to go back to work­ing for a big­ger em­ployer,” he said. “The prospect of los­ing my busi­ness be­cause I’m los­ing my in­sur­ance is sort of ridicu­lous to me.”

But Repub­li­can experts say peo­ple in Lapp’s po­si­tion have noth­ing to fear

“The prospect of los­ing my busi­ness be­cause I’m los­ing my in­sur­ance is sort of ridicu­lous to me.” JOSHUA LAPP Part­ner, De­sign­ing Lo­cally

be­cause Trump and Congress will keep the ACA pro­vi­sions in place for two to three years and then es­tab­lish a solid re­place­ment sys­tem. GOP re­place­ment pro­pos­als, such as House Speaker Paul Ryan’s Bet­ter Way white pa­per, still lack many key de­tails, how­ever.

“I don’t think they should be worried about af­ford­able plans,” said Dou­glas Holtz-Eakin, pres­i­dent of the con­ser­va­tive Amer­i­can Ac­tion Fo­rum and for­mer di­rec­tor of the Con­gres­sional Bud­get Of­fice. The GOP has “com­mit­ted to keep­ing the pre­mium sub­si­dies, and they’ve pledged to sta­bi­lize the in­di­vid­ual in­sur­ance mar­ket.” The health plans avail­able un­der the re­place­ment sys­tem “will be even bet­ter.”

Ac­cess to af­ford­able health in­sur­ance has long been a ma­jor fac­tor for Amer­i­cans in de­cid­ing whether to leave a job with health ben­e­fits and start their own busi­ness or work in­de­pen­dently. Lapp is one of an es­ti­mated 23 mil­lion self-em­ployed en­trepreneurs in the U.S., ac­cord­ing to the fed­eral Small Busi­ness Ad­min­is­tra­tion.

Be­fore the ACA, peo­ple think­ing about self-em­ploy­ment, par­tic­u­larly those who were older or had pre-ex­ist­ing con­di­tions, had no guar­an­tee that in­sur­ers would sell them a com­pre­hen­sive, af­ford­able plan—or any plan at all. Some experts say women are more averse than men to the risk of leav­ing a job with health ben­e­fits to strike out on their own.

As a re­sult, many Amer­i­cans stuck with jobs they didn’t want just to have health in­sur­ance. A 2008 Har­vard Busi­ness School study es­ti­mated that 11 mil­lion peo­ple were caught in so­called job lock tied to health cov­er­age. Economists say job lock crimps the dy­namism of the U.S. econ­omy, dis­cour­ag­ing en­trepreneurs from de­vel­op­ing po­ten­tially suc­cess­ful new prod­ucts and ser­vices and re­duc­ing the num­ber of startup firms that may go on to hire workers and boost the econ­omy.

“Both logic and ev­i­dence show that the abil­ity to buy health in­sur­ance at rea­son­able prices, even if you don’t work for a big firm, al­lows peo­ple to take chances in their work that bene-

“What am I sup­posed to do in the next two to four years? Why cre­ate anx­i­ety and re­place some­thing that’s meet­ing peo­ple’s needs?” LISA MARTIN Web­site con­sul­tant

fits the econ­omy and so­ci­ety in the long run,” said econ­o­mist Doug El­men­dorf, dean of Har­vard’s Kennedy School of Gov­ern­ment and for­mer head of the Con­gres­sional Bud­get Of­fice.

Both Repub­li­can and Demo­cratic pol­i­cy­mak­ers have de­cried job lock and urged adop­tion of a portable in­sur­ance sys­tem where peo­ple can keep their cov­er­age no mat­ter where they work. In 2009, Ryan said “the key ques­tion that ought to be ad­dressed in any health­care re­form leg­is­la­tion is, are we go­ing to con­tinue job lock or are we go­ing to al­low in­di­vid­u­als more choice and porta­bil­ity to fit the 21st cen­tury work­force?”

When the ACA in­sur­ance ex­changes opened in 2014, en­trepreneurs and would-be en­trepreneurs for the first time were guar­an­teed ac­cess to com­pre­hen­sive cov­er­age out­side the em­ploy­ment con­text, with­out re­gard to pre-ex­ist­ing con­di­tions. The Ur­ban In­sti­tute pro­jected in 2013 that the num­ber of self­em­ployed peo­ple would in­crease by about 1.5 mil­lion, or more than 11%, with the ad­vent of univer­sal avail­abil­ity of af­ford­able in­di­vid­ual in­sur­ance un­der the law. Experts say it’s too soon to tell how the ACA ac­tu­ally has af­fected self-em­ploy­ment.

Still, there’s ev­i­dence that pub­licly pro­vided health in­sur­ance prompts more peo­ple to start busi­nesses. A 2015 Har­vard Busi­ness School study found that after the Chil­dren’s Health In­sur­ance Pro­gram was started in 1997, the self-em­ploy­ment rate for par­ents of CHIP ben­e­fi­cia­ries jumped 23%, and the own­er­ship rate of in­cor­po­rated busi­nesses in­creased 31%.

A 2013 study found that after the ACA pro­vi­sion took ef­fect al­low­ing young peo­ple ages 19-25 to stay on their par­ents’ health plans, they were more than twice as likely to start their own busi­nesses.

That’s what Chicago pub­lic re­la­tions con­sul­tant Alyssa Con­rardy did. At age 24, she co-founded Pros­per Strate­gies, stay­ing on her par­ents’ plan for two years while she got the com­pany off the ground. It now em­ploys eight peo­ple and pro­vides them with group health in­sur­ance.

“I don’t think we could have got­ten here with­out the se­cu­rity the ACA pro­vided,” she said. “If the ACA is re­pealed, there are so many young peo­ple for whom en­trepreneur­ship will no longer be a fea­si­ble fi­nan­cial op­tion.”

Trump and other GOP lead­ers say they’ll keep that pop­u­lar ACA pro­vi­sion al­low­ing young peo­ple to stay on their par­ents’ plan un­til age 26. But it’s not clear what kind of health plans the re­place­ment sys­tem will of­fer or what the out-of-pocket costs will be.

How the GOP’s al­ter­na­tive model ad­dresses an­nual and life­time ben­e­fit lim­its and max­i­mum out-of-pocket costs is a huge con­cern for Namir Ye­did, 35, of San Diego. He left a job with health in­sur­ance in 2014 to de­velop sev­eral tech­nol­ogy prod­ucts.

Soon after buy­ing a plan on the Cal­i­for­nia ex­change, he was di­ag­nosed with a rare can­cer. His med­i­cal bills to­taled about $150,000. With­out the ACA’s an­nual cap on out-of-pocket costs, he would have been on the hook for tens of thou­sands of dol­lars.

Ye­did’s can­cer is now in re­mis­sion, and he’s pre­par­ing to bring his first prod­uct to mar­ket. He cur­rently em­ploys five peo­ple. “There are plenty of tal­ented peo­ple in the tech scene who couldn’t take the risks I did and go out on their own with­out the ACA,” he said.

Ryan and HHS sec­re­tary nom­i­nee Dr. Tom Price have pro­posed putting peo­ple like Ye­did into high-risk pools. Ye­did notes that these state pools gen­er­ally did not work well in pre-ACA days in pro­vid­ing af­ford­able cov­er­age for those with pre-ex­ist­ing con­di­tions.

He’s an­gry that the Repub­li­cans are rush­ing to re­peal the ACA with­out telling the pub­lic ex­actly what they’re go­ing to put in its place, mak­ing it im­pos­si­ble for peo­ple to plan their busi­ness lives.

Lisa Martin, 35, of Cam­bridge, Mass., ex­presses sim­i­lar frus­tra­tion. She left a job with health in­sur­ance in 2014 to start her own web­site con­sult­ing busi­ness, made pos­si­ble by the avail­abil­ity of ACA cov­er­age. Soon after leav­ing her job, she suf­fered a mi­nor stroke. Even though she re­cently switched to her part­ner’s em­ployer-based health plan, she hates the un­cer­tainty of not know­ing for sev­eral years what the GOP plan will look like and how it will address pre-ex­ist­ing con­di­tions.

“What am I sup­posed to do in the next two to four years?” she lamented. “Why cre­ate anx­i­ety and re­place some­thing that’s meet­ing peo­ple’s needs?”

Asked what he would ad­vise peo­ple con­sid­er­ing self-em­ploy­ment dur­ing the un­cer­tain in­terim pe­riod fol­low­ing re­peal of the ACA, Holtz-Eakin said: “I’d make the leap. There are poli­cies avail­able now. If you like them, you can have them. They have more to look for­ward to in the re­place plans. I don’t think they should be worried.”

But El­men­dorf dis­agrees, ar­gu­ing the Repub­li­cans have not put out nearly enough de­tails for the CBO to de­ter­mine how good and af­ford­able the plans un­der a re­place­ment pack­age will be and how it will af­fect the na­tion’s unin­sured rate. There’s no ev­i­dence, he added, that Repub­li­cans are will­ing to spend the large amount of fed­eral money or im­pose the rules nec­es­sary to en­sure good cov­er­age.

“These self-em­ployed folks should be quite con­cerned,” he said. “I don’t know how they should pro­ceed.”

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