When Natalie Chan finally quit her full-time job in the summer of 2014 to focus on Bat Haus, her Brooklyn, N.Y., coworking and event-venue business, she spent a nerve wracking half year without health insurance.
Chan, who is 35, had worked for a fine art photography printing lab in Manhattan that paid half her insurance costs, which ran over $400 a month — much too large a sum for her to pay on her own. In 2015, however, she returned to the ranks of the insured by enrolling in Obamacare through the New York State marketplace. Chan got basic coverage with a “bronze” plan that costs her $108 a month, including an income-adjusted subsidy. For 2017, she has selected a better bronze plan from a different provider costing about $80 more.
“If I didn’t have Obamacare low-cost insurance, I don’t think I would be so comfortably focusing on the business, which has become the hub for so many other startup businesses,” Chan says. Regaining insurance coverage “was like the safety net that, yeah, I can do this.”
Bat Haus’ airy, light-filled space has become the workday home for about 60 young freelancers and creative entrepreneurs in Bushwick, a Brooklyn neighborhood that is now a hotbed of hip young people striving to make it in New York. As the latest open-enrollment period for Obamacare comes to a close — and amid promises by President-elect Donald Trump and a Republican Congress to end it by repealing the Affordable Care Act — we canvassed Bat Haus members to find out just how important Obamacare has been to their entrepreneurial dreams, and what they might do if it goes away.
The ACA and Entrepreneurship
It’s an important question because many economists have predicted that the ACA, under which some 20 million Americans today get health insurance, will boost business startups. That matters because new businesses are the engine of economic growth in the United States and the primary source of net new job creation.
Economists’ main argument has been that the ability to get quality, affordable insurance through ACA-created marketplaces will break what’s known as “job lock” — a situation where talented people are dissuaded from leaving their jobs to start companies because they don’t want to lose employer-provided health insurance.
Looked at from the flip side, business starts could rise because access to affordable insurance reduces one very personal risk. Given that half of new businesses don’t survive beyond 5 years, starting up is always risky, says Jason Wiens, policy director at the Ewing Marion Kauffman Foundation and lead author of its Entrepreneurship Policy Digest. The theory goes that, “if you knew you could get insurance, you might be more likely to do it, because that’s one less risk you have to worry about.”
One 2013 study estimates that the ACA will lift the number self-employed individuals by 1.5 million, or 11 percent. But whether the law has had this sort of effect is not yet clear because not enough time has passed to judge the impact and some elements of the law have not been fully implemented, according to a November 2015 Pacific Research Institute study. However, the fact that business ownership rises slightly as people become eligible for Medicare suggests that the ACA could have a facilitating effect, too.
The law is also seen as positive for small companies because it makes it more affordable for them to offer health benefits to employees, which can help them compete for and retain talent. In 2015, 10,700 small employers covered 85,000 employees through the ACA’s Small Business Health Options Program.
[Related: Entrepreneurs Have Embraced the ACA]
Considering the importance of entrepreneurship to the economy, policymakers need to consider the impact of all policy changes on business owners, including a repeal of the ACA, Wiens says. “We need entrepreneurs to be out there taking risks and starting companies,” advancing up the economic ladder and creating jobs, he says. “The unintended consequences may be great, and may harm the ability of entrepreneurs to start businesses” and of job seekers to find jobs.
The Bat Haus entrepreneurs we interviewed who use Obamacare did not link their decisions to pursue self-employment to their ability to get this insurance — they would have likely pursued the same careers anyway or were already doing so before Obamacare began in 2014. This is not a surprise, given young people tend to be healthier and also may be less subject to job lock.
A Lighter Load
“I’ve been freelancing for 5 years, and my insurance hasn’t really been a factor in terms of my career decisions,” says Rachel Gordon Loube, 32, an independent filmmaker who directs, produces and shoots documentary films and also freelances as a videographer and editor. Her short film “Every Tuesday: a Portrait of the New Yorker Cartoonists” premiered at the Tribeca Film Festival in 2012, and she is currently finishing her first feature film. “But now health insurance is more affordable, and that’s been really a great weight off my shoulders.”
Loube says she has always had coverage. Her first Obamacare plan was a subsidized “platinum” plan for which she paid about $300 a month, but a lower income has since put her in an “essential” plan, which is much cheaper at about $40 a month and offers better coverage, but has a smaller network of doctors.
“I’m not using it that much,” she says. “I’m just happy to have an insurance card in my wallet for peace of mind.”
Her world of New York film is primarily populated by freelancers for whom corporate jobs with benefits are remote. “It’s passion that’s driving all of us… And a lot of us are making sacrifices to pursue these careers that we’ve chosen,” she says. “That being said, Obamacare has helped us pursue these things that we are so passionate about.”
Interestingly all of the Obamacare users at Bat Haus that we interviewed were women. The men we spoke to tended to have purchased cut-rate catastrophic coverage from providers like Oscar, and were foregoing Obamacare. But the women, concerned about their ability to access doctors for female-oriented health services, as well as other potential health issues, had determined that Obamacare was best for them. All carefully weighed their options, something unsurprising given research that shows that women tend to carefully calculate the risks they take.
Obamacare has been attractive to many women because it guarantees preventive women’s health services, including free wellness visits, mammograms, screenings for cervical cancer, prenatal care and access to contraception — and 45 million women have taken advantage of them. Given women of reproductive age spend 68 percent more on healthcare expenses than men, it’s no surprise that more women have enrolled in Obamacare than men.
Weighing the Options
Kat Shuford, a 29-year-old Georgia native, works as an independent contractor doing web design for a company in California. This year, she also launched a fashion line, called Catbat Shop, selling capes that she designs for both men and women. Shuford said she plans to select a plan on the New York exchange during the current open enrollment period, having previously bought insurance in her home state.
“I have been spending a lot of time looking at it. It’s very time consuming,” she says.
Shuford expects to buy a “silver” plan with a premium of $370 a month. She considered a high-deductible catastrophic plan, but given a chronic back condition for which she sees a chiropractor, the silver plan looks cheaper.
Unfortunately, her new plan won’t cover her therapist visits, though, so she may reduce their frequency. “As far as my business goes, being able to get my therapist covered was huge, because I was able to get the confidence and stability to break out on my own.”
Shuford and the other women we spoke with say that, if the ACA is repealed and they lose low-cost health insurance, they would face real hardship. Some say they would be forced to reevaluate their professional choices.
“If health insurance became way too expensive to sustain as a freelancer, I’d probably seek a position at a tech company,” Shuford says. “It’s just weird that your life would have to change because you have some health concern, but I know that’s the reality for some people. It could be my reality,” she adds. “I’d wait until I was really forced into it, because I like my job and being independent is super important to me.”
Chan, the owner of Bat Haus, is worried for herself, her members and for her business.
“I’m just as scared as everyone else that, if this gets taken away, I’ll have to pay double or triple,” she says. “Then life just becomes paying high rent and paying high health insurance… And then you think: ‘Maybe I should just go back to working for a big company.’”
Some members of Bat Haus have health concerns, she says, and many worry about the cost of insurance. “I can’t imagine if we don’t have this anymore. It will definitely be a nightmare,” she says. If insurance gets more costly, she expects to lose coworking customers. For some, “if they have to pay more for health insurance, they won’t be able to afford us, for sure.”