Can Obamacare Really Help Startups Grow Faster?

Nov 1, 2013

startup obamacareIf you’ve been watching the news lately, chances are you have heard a lot about the negative aspects of Obamacare. First it was the question of the individual mandate, then the potential job losses due to the cost of employee healthcare, and finally it was the government shutdown over whether the law should even be funded. Having survived years of twists and turns, the Affordable Care Act stood its ground, but now is plagued by a non-functioning enrollment web site. What more could go wrong, one might ask?

Well, it seems like the most profound enemy of Obamacare is 24-hour cable news. All along, pundits have pontificated about the negative impact of the health care law on small business owners, arguing that entrepreneurs would be hamstrung by the cost of insurance and forced to lay off employees. However, they have failed to recognize the opportunities Obamacare provides for startups and how much it actually encourages entrepreneurship.

How can Obamacare be a benefit for startups?

Once Obamacare is in full swing, many small businesses are expected to encourage employees to purchase their own insurance through the exchanges, They will do this by paying a fair wage in lieu of providing healthcare as a “benefit.” Since the healthcare law cannot refuse to cover people with preexisting conditions, the benefits of group coverage become less relevant in a post-Obamacare world.

More entrepreneurs: Many experts who speculate on the economy expect this new “freelance economy,” where health coverage is truly “portable,” will soon be infused with a spirit of entrepreneurship. After all, what was the biggest deterrent to starting a business before Obamacare? That’s right, it was losing health benefits. Now all the dreamers of the world can finally take the plunge and quit their day jobs. So rather than discouraging job creation, the new law is opening doors for people with preexisting conditions who have always wanted to start a business.

Startups can start fresh: When a new company is born, it has no history of offering health insurance to employees. While it is never a good idea to go without insurance, startups now how have the option of allowing employees to purchase healthcare from the exchange using government subsidies. This gives newly minted entrepreneurs an opportunity to build their business without having to choose between cash flow and health benefits for employees.

The new law provides more subsidies for people who earn less, meaning Obamacare subsidies could make health insurance pretty affordable for those in startup mode.

Will it work?

Even the biggest supporters of Obamacare will admit that the implementation of the law was done by amateurs who couldn’t think further out than the next week or two. Obviously they never beta-tested the web site or checked the credentials of the web developers, but all that aside it looks like the law could cause a small business revival of sorts. Check back in a year or so and see how it has changed the business climate and fueled the growth of startups.

Business owners with fewer than 50 full-time employees are not obligated by the Affordable Care Act to provide group health coverage, but in many industries this is still expected. While some might look at this “lack of obligation” as an opportunity for employers to stop offering coverage, it may still be necessary in order to remain competitive. Now that healthcare exchanges are up and running in every state, small business owners have an option that didn’t previously exist; they can give employees a financial incentive to purchase an affordable individual plan from their state healthcare exchange. This option will afford the business better cash flow and help grow the business faster.

Photo Courtesy of Imagery Majestic /