In the October 14, 2013 edition of The New Yorker, author James Surowiecki argues that the Affordable Care Act, which is often referred to as “Obamacare,” will have “enormous” benefits for entrepreneurs and small businesses. You can find the article here.
One benefit, according to Mr. Surowiecki, is that employees will no longer face “job lock” — that is, being locked into a corporate job simply for the health insurance benefit. Now, people can leave their corporate jobs and still get quality, affordable health insurance. Studies show that people who are free from “job lock” are more likely to start new businesses. Mr. Surowiecki cites one particular study that concludes that Obamacare will allow 1.5 million Americans to become self-employed.
A second benefit is that small employers will no longer face exorbitant premiums due to “experience rating,” which is the practice of charging smaller groups more depending on the composition and health of that small group. Obamacare makes experience rating illegal and, instead, requires the use of “community rating” for small business policies (just like for individual policies). Mr. Surowiecki argues that this change in rating sharply restricts an insurance company from charging small businesses more. When coupled with the available tax credits to small businesses, the Affordable Care Act should translate to lower overall health care costs, according to Mr. Surowiecki.
I’ve spent quite a bit of time researching options for myself and for several small business clients on the California health exchange, known as Covered California. In general, I have to admit that I’ve liked what I’ve found — which is better, more generous health insurance policies at lower prices. So far, every one of my small business clients who has gone to the exchange has reached the same conclusion: that they can get better quality insurance at a lower cost through Obamacare compared to the small group plan they had before.
Is that your experience too? Or has your experience been different? If you or your small business has researched options or applied for coverage through an exchange, I would love to hear from you.