How health bill could hurt small businesses
Plan jeopardizes insurance for 1.5 million workers and entrepreneurs in California
For years, Nancy Harvey, who runs a child care center out of her West Oakland home, could not afford health insurance for herself or her three employees.
That changed under the Affordable Care Act, which provides Harvey, 55, a federal subsidy to buy a Kaiser health plan through the state exchange, Covered California. The insurance coverage was critical last year when doctors suspected Harvey might have developed a pituitary gland tumor — a condition her mother died from — and she had to undergo a series of tests that would have been unaffordable without insurance.
“It was an absolute godsend,” Harvey said. “The bill was high, but it would’ve been quadruple if I had not
had the insurance.”
Harvey is one of about 1.5 million self-employed Californians and workers at small businesses across the state who gained health insurance under the Affordable Care Act — and could lose coverage if Congress adopts a House-passed measure to repeal the health law, according to a new analysis from the UC Berkeley Center for Labor Research and Education.
The research was funded by Blue Shield of California and the health foundation California Endowment.
These workers saw especially large gains in insurance under the law because, unlike the millions of Californians who work at larger companies, they did not previously have insurance through their jobs. The health care law provided many of these entrepreneurs and workers with subsidies to buy insurance on the state exchange, Covered California. The 2010 law also expanded federal funding to Medi-Cal, California’s version of Medicaid, so more working-age adults could enroll in the insurance program for the poor.
The two affordable care programs helped lower the uninsured rate among self-employed Californians from 34 percent to 18 percent between 2013 and 2015, according to the report. Similarly, the percentage of uninsured workers at small businesses — defined as companies with fewer than 50 employees — fell from 31 percent to 19 percent during the same period, the report found.
The health care law requires employers with at least 50 full-time workers to provide health insurance or face a tax penalty.
Some small-business groups have chafed at such mandates. The law’s “mix of more government regulation, mandates and controls, increased taxes, and ramped up government subsidies and spending ... mean increased costs, dampened job creation, and diminished economic growth,” according to the Small Business and Entrepreneurship Council, a Washington-area group.
According to the UC Berkeley analysis, employees of small businesses tend to rely more on Covered California and Medi-Cal because they are twice as likely than workers at larger employers to be lowincome. They include independent contractors and workers at restaurants, family-owned motels, independent grocery and drug stores, gas stations, clothing retailers and tax accounting firms.
In 2015, the most recent year for which data were available, about 567,000 self-employed Californians and more than a million employees of small businesses were enrolled in affordable care coverage — either through Covered California or Medi-Cal expansion, the report found.
These workers could lose coverage under the American Health Care Act, the GOP health care bill passed by the House of Representatives earlier this month. The bill would significantly curtail federal funding to Medi-Cal, making it difficult to maintain current levels of enrollment unless the state can make up the billions of dollars on its own. And the measure would reduce federal subsidies to many of the 1.2 million Californians who use the assistance to buy plans on the state exchange — particularly older Californians in their 50s and 60s and those who live in highcost areas — because the proposed GOP subsidies do not take income or cost of living into account. Some younger Covered California enrollees in their 20s, however, could receive larger subsides under the GOP plan.
“Many of the self-employed and small business employees enrolled in the Medi-Cal expansion and Covered California with subsidies could lose coverage if the (act) becomes law,” said UC Berkeley health policy analyst Laurel Lucia, who co-authored the report.