Large businesses have been grousing about new rules in the health care law that will raise their costs. But a new study highlights how the Affordable Care Act may actually be a boon to small businesses and entrepreneurs.
By guaranteeing that individuals can purchase comprehensive and affordable insurance plans, the law will allow would-be entrepreneurs to leave their corporate jobs without worrying that they could become uninsured. The study estimates that about 1.5 million more people will start their own businesses after the law’s major provisions kick in next year.
“It frees you up to make a choice that may be very difficult or impossible to make without it,” said Linda Blumberg, a senior fellow at the Urban Institute, and one of the paper’s authors.
The paper examines two studies that compared people with easy access to individual health insurance to those without it—one observed a spike in small-business formation in the month people became 65 and became eligible for Medicare; the other looked at what happened when New Jersey overhauled its insurance-regulation system to expand access to individual health plans. In both cases, those who could easily get their own coverage were more likely to start their own businesses. (A similar trend holds for people who have access to employer-based insurance through a spouse.)
The research echoes the views of small-business leaders in Massachusetts, which enacted its own health care law years ago. Since the commonwealth set up insurance regulations and a regulated marketplace for individuals to buy health plans, it has seen its economy grow and become an increasingly attractive base for start-ups, investors and business groups say.
“People can’t live on just a vision; they need health insurance,” Laura Fitton, who founded the social-media company Oneforty, told National Journal last year, in a story on post-health-reform entrepreneurship in the Bay State “I absolutely was able to get better people.”
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