Obamacare Clears the Way for Entrepreneurs

For those weighing the risks and rewards of starting their own business, healthcare is no longer an issue

In January 2013 I left a great job at Microsoft to focus on a couple of entrepreneurial projects. Financially, it was a tough decision. I gave up years of stock awards that hadn’t yet vested, and I would be forgoing a salary until we could get our own business off the ground. But that was manageable. The biggest risk, and the thing that caused us the most anxiety, was the question of what to do about healthcare. The insurance options were extremely hard to parse and everywhere we looked there was another horror story about health-cost driven bankruptcy, or worse.

To mitigate this uncertainty we took the COBRA option of extending the Microsoft health plan and paying in full at more than $1000 per month (we’re a married couple in our 40s). We lived with this bad financial decision for over a year before realizing the error and switching to what seemed like a reasonable plan for somewhere in the low $400s per month. In the couple of years since then the plan has changed a few times and the premium for our current plan is in the high $500s.

Still, whenever my thoughts turned to our healthcare I would worry about what would happen if we did have a big medical event. Would the insurance company find a way to deny us coverage? What if we exceeded the lifetime limit? How would we handle future healthcare coverage with a serious pre-existing condition?

Fast forward to yesterday. Like many people in the individual market our plan was cancelled. The replacement our insurance company suggested costs in the mid $600s.

So I went to the Washington State Healthplan Finder. There I could shop for healthplans more easily than I expected, providing only our ages, genders and estimated annual income. We didn’t qualify for any subsidies, but I could find roughly comparable coverage for less money, or improved coverage for a little more money. The information about plans is presented quite well, and comparisons are easy to make. I did find that direct comparisons between plans were confusing when the interaction between co-pays, co-insurance and deductibles gets a little complex.

But even with the time it took to figure out some of these complexities, it was only a couple of hours before I was comfortable that we would have affordable health insurance. And more importantly, the peace of mind that we wouldn’t be destroyed financially by an unexpected medical event.

It struck me that this would be true at any level of coverage. Under the Affordable Care Act (ACA, or “Obamacare”) everyone can rest easy that…

1. They will never pay more than $6250 for essential medical expenses in a given year ($12,500 for a family).
2. There is no lifetime limit on the benefits that they can receive.
3. Pre-existing conditions will never be an issue.

For people with lower annual incomes (like we had for more than a year before the business broke even), significant subsidies kick in, making healthcare very affordable. During the first year of entrepreneurship we would have qualified for a $150 tax credit, for a estimated premium in the mid $200s for a bronze level plan.

If this doesn’t strike you as a profound improvement to the situation before the ACA came into effect, then either you’re in denial, or you’re on your company’s healthcare plan and never expect to leave. Cancer treatments can routinely cost hundreds of thousands of dollars. A big heart attack with associated surgeries a million or more.

The ACA clears the way for entrepreneurs, removing the healthcare hurdle completely. More than that, it ensures that millions of people will no longer have to live in the shadow of an impending healthcare-induced financial disaster. These people don’t have company-provided healthcare. They don’t have the luxury of deciding to be unemployed in order to pursue a startup. They are unemployed, or partially employed, struggling to make ends meet. Or they are self employed, providing for their family.

Sure, the administration blew the roll-out. That’s unforgivable, given what’s at stake. But the mechanics can be fixed in a matter of months, and then refined over time. What we, America, can’t afford is for the policy to fail. It might be a decade or more before we get a chance at a do-over.