Obamacare Could Lead To 33% More New Businesses Over The Next Few Years


Despite objections by businesses to parts of the Affordable Care Act, there could be as many as 33% more new small businesses over the next few years as a result of the law, reports the WSJ. The Kauffman-RAND Institute for Entrepreneurship Public Policy calculated the estimate.


Why the projected increase?

A major barrier that keeps people, especially those with pre-existing conditions, from starting their own business is the ability to get robust and affordable health insurance. People seek out and keep corporate jobs, not because they want to, but because they feel like they have to. Entrepreneurs call the phenomenon "entrepreneurship lock."

The Affordable Care Act could potentially solve that by offering people who start businesses coverage through state- or federally-run marketplaces for insurance (exchanges).

But that's a big if. Many details of the law's implementation have yet to be worked out.


It won't be fully active for some time yet, and the consequences and price of coverage won't be settled for even longer. Premiums may even go up for young, healthy people.

To see that full 33% increase in new businesses, coverage from exchanges would have to be equivalent to that from corporate plans, which is unlikely in the short run.

For young people, the idea of being unable to pay for massive medical bills seems distant and unlikely. But many older people have seen it in others or experienced it themselves, or have dependents that they have to worry about.

Without a significant savings cushion, a luxury many people don't have, leaving a safe corporate job with benefits just doesn't seem like an option.

Great business ideas aren't limited to the affluent or the young, and though it might take a while to play out, this looks like an unsung benefit of the new health care legislation.