Repeal & Replace Watch

Uncertainty Over Health Care’s Future Hobbles Entrepreneurs

Entrepreneur Stinson Dean and his wife, Stephanie, play with their three children in their yard in Independence, Mo. He says the Affordable Care Act made it possible for him to start his own business. (Alex Smith/KCUR)

Stinson Dean is used to taking risks. The entrepreneur from Independence, Mo., says coping with the ups and downs of the market is an inevitable part of his business.

But when he started his company about a year and a half ago, he laid down a firm rule.

“One of the things I wasn’t willing to risk was the health of my family,” Dean said.

Dean is the proud father of three young children — two girls and a boy. Playing with them in the front yard before dinner, he and his wife, Stephanie, talk about the possibility of another.

Like many Americans, Dean has nervously watched this year’s national health care debate. He credits the Affordable Care Act for making it possible to start his business, which involves buying Canadian lumber and selling it to U.S. lumberyards. Now, uncertainty about the ACA’s future affects his business’s potential for growth.

In May 2016, Stephanie was pregnant with their daughter Julie, and Dean was working as a commodities risk consultant.

A few months before a baby’s due date is typically not the time for a big career move, but it happened to mesh with a once-in-a-lifetime opportunity in the lumber market to buy low and sell high.

Encouraged by the availability of affordable insurance through the ACA, the family took the plunge. Dean left his job and started his company. The move paid off, as new construction boosted Dean’s business far beyond what he imagined.

He’s now ready to expand and bring on three or four new people, but there’s a problem.

“There’s a huge unknown with the ACA and what that’s going to look like,” Dean said.

President Trump and many members of Congress campaigned with promises to repeal and replace the Affordable Care Act, and they’ve spent much of this year attempting to do so.

That’s meant hardship for Dean. He’s having trouble persuading people with steady jobs and great benefits to take a chance and work for him.

Repeal-and-replace efforts are again alive in the Senate, and the president has threatened to withhold certain payments to insurers. That strain, on top of already unstable insurance markets, has led Dean to worry about whether decent insurance coverage will be available in the long run for him, his family and potential new employees

“What that’s doing for me is preventing me [from luring] folks who are in a similar situation to where I was — a nice corporate job, making good money, with great benefits, with kids — convincing them to leave that to come work for me with no benefits,” he said. “They’re going to have to go on the individual marketplace, on healthcare.gov, just like I did, and pick a plan.”

Exactly how the ACA has affected entrepreneurs and job growth remains unclear, said Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, based in Washington, D.C. But there’s been a sharp increase in entrepreneurial activity since 2013, when the insurance marketplaces started.

Baker says the ACA has helped entrepreneurs by leveling the playing field in the competition for hiring talent. Before the health law, entrepreneurs had been at a disadvantage compared with larger businesses, who were more likely to be able to afford to offer insurance.

“Once [an entrepreneur’s] workers are able to get insurance through the exchange, much of that disadvantage goes away,” Baker said.

Baker said uncertainty is poison for any business, but all the questions about the ACA’s future have made 2017 especially toxic for entrepreneurs.

Under the Affordable Care Act in California, a million small-business employees and half a million self-employed entrepreneurs got health coverage through the Medicaid expansion or a subsidized plan on the state exchange.

In California, the Graham-Cassidy bill would cut $28 billion from those programs by 2026, and $58 billion by 2027.

“So it would be massively destabilizing to the ability of small employers to attract talent, it would be very difficult for entrepreneurs and self-employed folks, to access some level of coverage,” said Mark Herbert, California director for the Small Business Majority. “There’s no way that you can remove those sorts of dollars out of our local communities and not see some sort of economic impact on small businesses.”

Baker echoed that sentiment. “For a lot of small businesses, they are sitting there with some trepidation, saying, ‘OK, how does this work out? Where are we a year from now? Where are we two years from now?’ And presumably, at least some of them are going to be putting their plans on hold,” Baker said.

That’s the case for Stinson Dean. He sees big opportunities opening in his field again, but he may not be able to take advantage of them, even if the ACA survives this year.

“What about 2019, 2020?” Dean said. “These are the questions I’m being asked by these folks I’m trying to recruit, and I don’t have an answer for them.”

April Dembosky of KQED contributed to this report.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

This story is part of a reporting partnership with NPR, KCUR and Kaiser Health News.

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