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ACA likely to free workers for entrepreneurship

NEWS IN BRIEF — Posted June 17, 2013

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A report from the Robert Wood Johnson Foundation concluded that the Affordable Care Act may end up encouraging more people to start their own businesses.

Certain individuals have been reluctant to become entrepreneurs because of concerns about denials of health coverage due to a preexisting condition, or not being able to afford premiums unless an employer shared the costs. Others fear losing access to a trusted doctor, the report said.

Starting in 2014, federally subsidized health coverage no longer will be tied just to employment, the foundation said, so more people might gain an incentive to strike out on their own and become self-employed. ACA provisions that also might encourage this are the requirements that insurers can’t turn down an applicant due to a preexisting condition, and must offer plans on and off state health insurance exchanges that follow minimum coverage requirements. Higher premiums no longer will be tied to health status.

The ACA’s Medicaid expansion and federal tax credit provisions are other parts of the law that might persuade more people to leave traditional employment and develop their own businesses, the report stated (link).

Other organizations are skeptical that certain business sectors will benefit from the ACA. The National Federation of Independent Business has reported that the law’s tax on health insurers “will fall on most of the country’s 5.8 million small businesses and 15 million self-employed individuals” when health plans pass along the costs of the tax in the form of higher premiums.

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