Georgetown University and Urban Institute Researchers Release State-by-State Analysis on How the Affordable Care Act Will Create Opportunities for More Entrepreneurs

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By ensuring that people can’t be discriminated against when they buy health insurance and by helping those with modest incomes cover the cost of premiums, the Affordable Care Act is expected to increase the number of self-employed entrepreneurs by 1.5 million, according to a new report.

“Far too many people have had their dream of launching their own business delayed or denied because they couldn’t afford to give up the security of good health insurance."

Sabrina Corlette, Georgetown University Center on Health Insurance Reforms

A team of nationally recognized researchers estimate that the number of self-employed entrepreneurs will be 1.5 million higher in 2014 because of the new health insurance options created by the Affordable Care Act (ACA). The Robert Wood Johnson Foundation sponsored report was coauthored by Georgetown University’s Center on Health Insurance Reforms and the Urban Institute.

“Far too many people have had their dream of launching their own business delayed or denied because they couldn’t afford to give up the security of good health insurance,” said Sabrina Corlette, co-author of the report and director of the Georgetown University Center on Health Insurance Reforms. “That’s all about to change when the Affordable Care Act starts offering high-quality health insurance options that aren't tied to employment.”

The researchers found the impact of the ACA on entrepreneurship will vary state by state, depending on the insurance market reforms states may already have in place. For example, they estimate an increase of 124,000 newly self-employed in Texas, 72,000 in Florida, 67,000 in Ohio and 60,000 in Pennsylvania because the ACA’s reforms will improve individual's access to high quality health insurance that isn’t tied to their jobs. Massachusetts, however, will see no measurable change because many of the ACA’s reforms are already in place.

Provisions of the new health law that may encourage more people to start their own business include:

  • No applicant can be turned down because of a preexisting condition.
  • Individuals cannot be charged higher premiums because of their health status.
  • Insurers must offer plans with a comprehensive set of essential health benefits.
  • Tax credits to help low- or moderate- individuals and families will reduce premium costs.
  • Medicaid expansion, in some states, will provide coverage for those with the lowest incomes.

The research was funded by Robert Wood Johnson Foundation and published by the Center on Health Insurance Reforms (CHIR) and the Urban Institute. CHIR is composed of a team of nationally recognized experts on private health insurance and health reform. For more on the center’s work, please see our website and blog.

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Cathy Hope
Georgetown University Center on Health Insurance Reforms
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