Health and Science

Small businesses split over Republican health plans

Stacy Cowley
Leah Gomberg, a home stager, and her husband, David, a self-employed psychologist, with their family in Maplewood, N.J., June 29, 2017.
Andrew Seng | The New York Times

Small-business owners have been some of the most vocal opponents of the Affordable Care Act. One trade group fought the overhaul all the way to the Supreme Court.

But for many solo entrepreneurs and freelancers, the seeming collapse of the Senate's efforts to repeal and replace the law came as a relief.

Sarah McCarthy, 39, a talent agent in Los Angeles, said President Barack Obama's health care law allowed her to start her own business. She opened her company in 2013, and for the first two years, her income was low enough that she qualified for subsidized coverage through the state exchange started after the law. That allowed her to put more money into building her business. She now employs a part-time assistant and earns enough to pay the full cost of her health insurance.

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She fears that the health care law's elimination would force her or her husband, a self-employed photographer, to work at a large company to gain affordable health coverage for them and their two daughters.

"Being able to buy health insurance that didn't completely break us financially was key to our ability to take the risk and become entrepreneurs," Ms. McCarthy said.

Her opposition highlights a growing schism about the Affordable Care Act among small-business owners — a split exposed as Republicans have pursued reversing much of the law in recent months. The divide also points to an unexpected outgrowth of the Republican agenda in Washington: As lawmakers pushed their plans, public support for the Affordable Care Act grew from new corners.

With so many forces aligned in opposition to the Senate's proposed changes, the views of small-business owners have not been a decisive factor. But the enthusiasm that a growing number are voicing for the health care law weakened the argument, often cited by Republicans, that small businesses had been harmed by it and need a rollback.

Business owners with a few dozen or more workers often resent the cost and regulatory burden of complying with the law's mandates, and many have backed the Republican efforts. For those who employ only themselves, however, some of the features of the Affordable Care Act — like coverage for existing conditions and curbs on prices — opened up coverage unavailable to them before the law.

In addition, there is a vocal group of self-employed workers who are, like many people, paying higher premiums and deductibles because of the law. But some of them want lawmakers to adjust the law to address those higher costs, instead of repealing and replacing it entirely.

The National Federation of Independent Business, a powerful industry lobbying group that was the plaintiff in the case that went to the Supreme Court, helped lead the small-business effort, years ago, to fight the law. It dislikes the costs that complying with the law impose on businesses, and the mandate that individuals buy insurance.

As the Senate took up its overhaul proposals, the trade group pressed hard for a full repeal — and then criticized lawmakers for not getting it done.

"Small-business owners are deeply disappointed," Jack Mozloom, a spokesman for the group, said. "The high cost of health care has been the No. 1 concern for small-business owners for more than three decades. Obamacare made that problem worse, driving up costs and shrinking choices. The Senate had a chance to address the problem, and they blew it."

But as overhaul legislation advanced through Congress, many small-business owners became more vocal about their opposition to the changes. Other industry groups, like the Main Street Alliance and the Small Business Majority, championed their cause.

Manta, an online small-business community that regularly studies the sentiment of business owners, found that a majority of those it surveyed in January said that they wanted the law repealed during President Trump's time in office. Asked this month about the Republicans' Senate bill, far more people said they opposed it than supported it. (A majority of those same respondents said they approved of the job Mr. Trump had done so far as president.)

Brent Messenger, the head of community for Fiverr, a marketplace for freelancers, said that members he had spoken with recently lined up about 2-to-1 against a repeal of the Affordable Care Act. Striking down the law, he said, "would be potentially catastrophic for the gig economy."

Small-business owners generally face higher per-person insurance costs for themselves and their employees than large employers, because individuals and smaller groups are inherently more risky to insure — and, therefore, more expensive — than the larger pools that big employers can assemble. The Affordable Care Act tried to address some of those problems by requiring insurers to set level premiums for all individual policyholders by age and by prohibiting insurers from dropping policyholders if they got sick.

One in five people who buy coverage through the marketplaces created by the law is a small-business owner, totaling 1.4 million people, according to Treasury Department research. Another significant population relies on government programs like Medicaid, which the health law expanded.

Joel Schaubert, 51, a software consultant in Minneapolis, said that before the law, he worried about what would happen if he harmed his left arm, which he broke a decade ago in a biking accident. It became a pre-existing condition, and as he navigated the individual insurance market, the policies he bought explicitly excluded it from coverage, he said. That changed only after the health law took effect.

"I can finally get insurance that covers my entire body," Mr. Schaubert said.

But to expand coverage and bring in enough healthy customers to keep various insurance pools afloat, the government also forced some trade-offs. To put more people into the individual insurance market, it stopped allowing sole proprietors to join small-group pools and required them to instead buy individual coverage.

Daniel Thompson, who runs a small business selling and repairing bicycles, in the shop in Bel Air, Md., July 21, 2017.
Andrew Mangum | The New York Times

The intention was to prevent groups from cherry-picking healthy participants, but it had the side effect of significantly increasing costs for some sole proprietors. The rule also forced a number of professional associations to cancel the plans they offered members.

Leah Gomberg, 48, a home stager, and her husband, David, 50, a self-employed psychologist in Maplewood, N.J., used to purchase coverage for themselves and their three sons through a broker who bundled their business together with others into a small-group pool. Now, they pay about $1,800 a month, twice their previous premium, for an individual family policy with a narrower network and more out-of-pocket costs than her previous one.

"It's just sucking the life out of us financially," Ms. Gomberg said.

For some entrepreneurs, the individual market's combination of pricey premiums and high deductibles puts any plan at all out of reach.

Julie Petrocelli, 47, enjoyed low-cost employer insurance for most of her career through her job or her partner's. Newly single, she started a juice business last year near Seattle and went shopping for individual insurance. She was horrified to find that her least expensive option was about $250 a month, with a deductible of several thousand dollars. Facing with the choice between putting money into her health insurance or into her business, she picked the business.

"As much as I don't want to be without coverage — it's a scary thing — I've got to support myself," Ms. Petrocelli said.

Both Ms. Gomberg and Ms. Petrocelli said that they broadly supported the Affordable Care Act, but they would like to see its benefits spread around more evenly. They like the safety net it provides but are frustrated at the often high individual costs involved in making the system work.

Being forced to buy insurance ideologically irks some business owners, even those too small to be affected by the law's mandates. Daniel Thompson, 32, runs a bike shop in Bel Air, Md., with eight employees. Mr. Thompson, who describes himself as "a Rand Paul guy," referring to the Republican senator from Kentucky, said he considered it unconstitutional for the government to force people to purchase a product.

He had hoped for a full repeal. Failing that, he hopes lawmakers will put aside their partisan differences and work together on fixes.

"I'm in the bracket that got hit the hardest: I'm young, relatively healthy, and my employer doesn't provide health care," Mr. Thompson said. "I would like to see something, anything, happen to bring down premiums."