Obamacare Helped Me Grow My Business – and I’m Sick About It
Republicans say the Affordable Care Act kills jobs. I had a different experience. As a small-business owner, I used Obamacare to hire more people — but for reasons that make me a little bit nauseous.
Two years ago I raised a few hundred thousand dollars, mostly from angel investors, and started LifePosts, a web platform that helps people tell their life stories. Despite being “pre-revenue,” I wanted to hire a couple of employees to build the site.
For a business of this size, offering health insurance would cost me about $13,000 per employee per year. Three employees would therefore cost $36,000, or the price of hiring a junior employee.
Here’s my confession: I figured that, thanks to the Affordable Care Act, if I didn’t provide health insurance, my employees could still get coverage on their own, and the ones making the lowest income could get subsidies. My conscience was relatively clean – not pristine, but I could sleep at night.
So I started LifePosts without providing my employees with health insurance – and hired three people instead of two.
My company is tiny, but the thought process I went through applies to any company with fewer than 50 employees, which account for 90 percent of the firms, and for startups, which account for the vast majority of net new job growth.
Most of the debate about Obamacare’s impact on business has focused on whether companies will avoid hiring a 50th employee, to avoid the employer mandate, by hiring more part-timers. I can’t speak to that. But for businesses with fewer than 50 employees, having a health care safety net absolutely makes job-creation easier.
Ironically, this is exactly why conservatives in the 1990s pushed the idea of an individual mandate instead of an employer mandate, the Democrats’ preferred solution. They argued an employer mandate would increase the cost of hiring, while an individual-mandate system would free small businesses of incremental costs and employees of “job lock,” i.e. having to stay in a job to keep the insurance. At least as far as this very small business is concerned, the conservatives of the ‘90s (and Obama) had it right while the conservatives of 2016 have it wrong.
Now, I take no pride in the fact that I only saved LifePosts’ money by shifting the cost to my staff; while I gave them generous equity in the company to make up for it, they – and I — still had to pay a lot in the private market and we all earn too much to be eligible for subsidies. And I do wonder: if I opted for this path, won’t other companies do the same thing, maybe even those who can better afford to cover health expenses?
We will add health insurance as soon as we break even, if not sooner. I suspect that to attract good people in the future, I’ll have to add health insurance quickly. We’ve raised some more angel financing which might speed up that day. Still, I think for a company without profits – hell, a company without revenue – it was the right call.
I have several complaints about the Affordable Care Act. In New York, there are no plans for people who want to visit doctors out of network, the group insurance market for tiny companies seems expensive and for my employees, who don’t qualify for subsidies, the premiums seem high.
What I’d like to say to any politician who pretends to care about the plight of small businesses: Make the debate over the Affordable Care Act about how to improve it, not whether it should be repealed.
I used to cover Congress for Newsweek. Congress would routinely pass a law and then, three to five years later, “reauthorize” it. That was when they fixed problems. Every law needed fixes. It wasn’t a sign of failure; it was a sign of, well, being a law. The type of reforms varied according to whether the Democrats or Republicans were in control, but it was assumed that problems would be addressed.
We’ve gotten used to something radically different about Obamacare. Because Republicans have campaigned on a platform of repealing Obamacare, they have refused to fix anything. In their crusade to kill the Affordable Care Act, they are intentionally making it so premiums are higher and service is worse. How screwed up is that?
President Obama seems to have adopted an odd posture, too. Perhaps not wanting to admit that there are any flaws with the Affordable Care Act – or perhaps not wanting to waste time on legislation that would surely die in Congress – he has failed to aggressively push for a comprehensive set of fixes. Hillary Clinton recently did so, meaning that she has now, oddly enough, beat the Republicans to the punch in addressing Obamacare’s problems.
But let’s zoom in from the big picture to focus on my little business again: The Affordable Care Act allowed me to hire more people and grow my business. That certainly should not be the main criteria in assessing the law’s effectiveness, but unlike Republicans in Congress, let’s at least be honest about what’s happening.
Steven Waldman is founder of LifePosts.com, a platform for commemorating the most important people and milestones.