Self-employed people weigh returning to corporate jobs if Senate passes ACA repeal bill

Steven DeMaio of New York City has been happily self-employed as a writer and editor since 2008. At that time, he felt comfortable leaving a corporate job with health benefits and going out on his own because the state where he then lived, Massachusetts, had established a system guaranteeing affordable individual-market coverage without regard to health status.

But DeMaio, 46, recently decided to look for a corporate job with health benefits because of uncertainty over the future of his health insurance posed by Republican efforts to repeal and replace the Affordable Care Act. As of Aug. 1, he will begin working for a company that offers a group health plan.

"My first preference would have been to remain self-employed," he said. "I do want to work for this firm, but I wouldn't have started looking in the first place if not for all the political chaos and rhetoric threatening the ACA. There's a huge question mark about what the insurance markets will look like in 2018."

DeMaio is one of many self-employed Americans who are watching with high anxiety as Senate Republicans debate this week whether to replace the ACA or simply repeal most of the law.

Being able to buy affordable insurance regardless of pre-existing medical conditions under the ACA has freed many people like DeMaio to leave jobs with health benefits to launch their own businesses. It has loosened what both Republicans and Democrats long have criticized as job lock associated with this country's job-based health insurance system.

There are an estimated 23 million self-employed entrepreneurs in the U.S., according to the federal Small Business Administration. A 2008 Harvard Business School study estimated that 11 million people were caught in so-called job lock tied to health coverage. Economists say job lock crimps the dynamism of the U.S. economy, discouraging entrepreneurs from developing potentially successful new products and services and reducing the number of startup firms that may go on to hire workers and boost the economy.

I wrote about this issue in December and interviewed a number of young entrepreneurs who said they were emboldened to go off on their own because of the ACA's guarantee that they'd be able to buy a health plan without being discriminated against based on their pre-existing conditions. I checked back with them this month and talked to several other self-employed people to see if the thinking of this group had changed as GOP repeal efforts advanced.

What they said is they're following the Republican healthcare legislation obsessively and are thinking hard about whether they will be able to continue their businesses or will have to pursue alternatives, including seeking jobs with health benefits.

They're talking with their significant others, business partners and colleagues and deciding whether to try to tough it out no matter what the new GOP model looks like, sell their business, get on their significant other's employer plan, or move to another state or even another country with a universal healthcare system.

But mostly they're hoping the GOP repeal effort fails—or at least that Republicans preserve the ACA's protections for people with pre-existing conditions.

GOP leaders say they intend to maintain those protections and that their legislation would make premiums more affordable. But this week Senate Republicans are considering waivers for states and insurers allowing them to offer health plans that experts say would not provide the same safeguards in terms of essential benefits, guaranteed issue regardless of health status, community-rated premiums, and caps on out-of-pocket costs. The Congressional Budget Office has said the Senate bill would substantially increase costs for some people with medical needs.

"Maybe I'm wrong, but I'm increasingly confident that the Cruz amendment (allowing insurers to sell plans that lack ACA protections) doesn't go forward," said Namir Yedid of San Diego, a self-employed technology developer and cancer survivor who's in his 30s. "If it does, it's a different ballgame."

"I'm terrified of losing my insurance and I'm also worried about my entire community," said Lucia Gerdes, 38, a breast cancer survivor who opened the successful Cedar Mountain Café in rural western North Carolina with her husband three years ago. The café is one of the biggest employers in that area, with 10 to 15 employees during tourist season.

She said if the ACA is repealed or replaced with a system that doesn't offer affordable coverage for someone with a pre-existing condition such as hers, "We've talked about selling the business and perhaps moving to a more Democratic state that sets up a single-payer system. We're planning for a crisis. Everything is on the table."

Joshua Lapp, who launched a successful Columbus, Ohio-based urban planning firm in 2014, is also weighing his alternatives. "We have begun to explore what our options would be as a firm should something pass," said Lapp, who's in his late 20s and has congenital heart disease.

Lapp hopes he's able to keep the ACA protections and continue his business. "There are so many unknowns and there seems to be an inability (good for me!) of being able to pass an actual bill," he said in an email. "So for now I'm just going on as I was before, paying my monthly premium and hoping for the best."

DeMaio believes the threat of ACA repeal is having a chilling effect on entrepreneurs and people considering launching their own businesses, forcing people to hang on to jobs they know they should leave or apply for positions they don't want. "I don't think any small business or self-employed person wants that kind of volatility," he said.

Gerdes is angry about the current political situation. "I shouldn't have to leave my business that I've shed blood, sweat, and tears over, working 80 hours a week," she said. "It's so sad to think we'll have to sell everything we built because we may not have healthcare."