Reform provisions could increase number of self-employed, study says

Health insurance provisions in the Patient Protection and Affordable Care Act could significantly boost the number of self-employed individuals next year, according to findings released last week from the Robert Wood Johnson Foundation.

Sabrina Corlette, a research professor at Georgetown University's Center on Health Insurance Reforms and one of the study's authors, said that existing research has shown how linking health insurance coverage to employment status often leads to “job lock,” where people stay in their positions mostly because of the insurance benefits. Meanwhile, she said studies also have shown that when other insurance options are available, more people become self-employed. So about six months ago, Corlette and colleague Kevin Lucia began working with researchers at the Urban Institute, a left-of-center think tank, to examine what effects the Affordable Care Act's insurance provisions might have on the number of self-employed workers in the U.S. Along with fellow author Linda Blumberg, a senior fellow at the Urban Institute, the authors estimated that the full implementation of the healthcare reform law will increase the number of self-employed individuals by 1.5 million, or more than 11%, in 2014.

“On average, employers contribute about 80% of the cost of the premium. To leave that good, generous, comprehensive coverage—particularly if you're someone who knows you need care—can be a huge barrier to pursuing a dream of starting your own business,” Corlette said in an interview. “The ACA completely changes that paradigm.” For instance, the law provides premium tax credits to those who start their own businesses, Corlette said, adding that another helpful provision is the law's requirement that prohibits insurance companies from denying coverage to people with pre-existing conditions.

According to the report—which includes a state-by-state analysis—California, Ohio and Florida stand to see the largest increases in self-employed individuals as a result of the law. “In those states, the individual market is a really tough place for people, particularly if you have a pre-existing condition,” Corlette said. She said in some of those states, the numbers “would be a dramatic improvement.”

Massachusetts and Vermont, however, showed no increases, because those states have already enacted insurance reforms that provide more access to coverage and premium subsidies to pay for it.

Corlette took issue with some critics of the Affordable Care Act, who contend the law will increase costs for employers and bury them in regulations. “Most of that is sheer speculation,” Corlette said. “Employers have been cutting hours long before the Affordable Care Act. They've been cutting benefits long before the Affordable Care Act,” she added. “The only way we can test it is out in Massachusetts, and that employer-based coverage has increased and gotten better.”

When asked if the researchers found an increase in the number of self-employed workers in Massachusetts, however, Corlette said they did not find anything to use in their report.

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