Study: Obamacare Helps Self-Employed Californians and Those Working For Small Businesses

Earlier this month, House Republicans voted to repeal and replace the Affordable Care Act. While these lawmakers trumpet their vote and bad mouth the ACA, there is something they need to understand: It expanded healthcare coverage. And that is particularly true in California among certain groups, according to new research. 

Self-employed Californians and those working for small businesses saw their healthcare coverage expanded under the Affordable Care Act. The University of California, Berkeley’s Labor Center analyzed data from the California Health Interview Survey and found big coverage gains among self-employed Californians and employees of small businesses between 2013 and 2015. While 1 in 3 workers in both groups lacked health insurance in 2013, only 1 in 5 could say the same in 2015.

About 21.4 percent of self-employed Californians and 20 percent of small business employees relied on ACA coverage in 2015, either through Covered California’s subsidized coverage or Medi-Cal expansion.

Small businesses are the backbone of California's economy. Companies with 50 employees or less made up 91.5 percent of all businesses in California in 2015. More than 60 percent of California businesses employ only three to nine workers, while an additional 30.9 percent employ 10 to 49 workers. Both Covered California and the Medi-Cal expansion have been good for employees of small businesses because small business employees rely more heavily on both.

Small businesses with employees enrolled in the Medi-Cal expansion include restaurants, family-owned motels, independent grocery stores and drugstores, gas stations, clothing stores, and tax, accounting, bookkeeping and legal firms, according to UC Berkeley. California’s small-group health insurance market was limited to businesses with 50 employees until Jan. 1, 2016 when the small-group rules changed to allow businesses with 100 employees or less to enroll. An estimated 6.3 million Californians work for businesses with 100 employees or less.

There is a reason why small business employees rely more heavily on Medi-Cal and Covered California insurance: They make less money than employees of larger businesses.

Employees of small businesses were about twice as likely to have low household income, UC Berkeley found. Small businesses are also less likely to offer employer-sponsored health insurance. In 2015, over 90 percent of businesses with more than 50 employees offered coverage. Only 46.5 percent of businesses with three to nine workers and 66.2 percent of companies with 10 to 49 workers offered coverage. 

While self-employed Californians still have a high uninsurance rate, this rate declined from 33.8 percent in 2013 to 17.9 percent in 2015, according to UC Berkeley. That is the greatest drop in uninsurance rate among Californians.

The ACA’s Medicaid expansion in California allowed adults with income levels at or below 138 percent of the federal poverty level without children to become eligible for Medi-Cal. Individuals with incomes at or below 400 percent of the federal poverty level under the ACA who either lack coverage through an employer or with unaffordable employer-sponsored insurance are eligible for subsidies through Covered California. Those subsidies helped make healthcare coverage more affordable for the self employed. A much larger proportion of self employed Californians were in Covered California in 2015 than other workers eligible for subsidies.

Repeal of the ACA would leave many uninsured

If Congress does repeal the ACA, many of these coverage gains would disappear, UC Berkeley predicts.

The House bill that would repeal the ACA, the American Healthcare Act, would reduce tax credits for older adults while increasing them for younger adults in 2018 and 2019, according to the Kaiser Family Foundation's analysis. By 2020, it would replace the ACA's income-based tax credits with flat tax credits adjusted for age.

Premium tax credits make insurance through Covered California affordable for lower-income Californians. Without them, insurance premiums would soar. For example, the ACA Spotlight estimated that a 27 year old in Alameda County earning $17,820 a year and enrolled in the second lowest cost silver plan would see his or her monthly go up to $340 a month without a PTC, a 467 percent increase from the $60 a month they pay with a PTC.

As it stands now, the AHCA would also convert Medicaid funding to a per-capita allotment and limit growth starting in 2020. The Commonwealth Fund predicts that if Medicaid funding experienced big reductions through block rants or per-capita caps, the effects would be “significant.” States would have to reduce the number of people served by Medicaid to make up for financial losses, and that would cause the number of uninsured to increase.

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