Uncertainty Over Health Care Law's Future Hobbles Entrepreneurs

Sep 23, 2017
Originally published on September 23, 2017 4:05 pm

Stinson Dean, an entrepreneur from Independence, Mo., is used to taking risks. He buys Canadian softwood framing lumber to sell to lumberyards in the U.S. and says coping with the ups and downs of the market is an inevitable part of doing business.

But when he started the company about a year and a half ago, he laid down a firm rule.

"One of the things I wasn't willing to risk was the health of my family," Dean says.

Dean is the proud father of three young children — two girls and a boy. Playing with them in the front yard before dinner, he and his wife, Stephanie, talk about the possibility of another.

Like many Americans, Stinson Dean has nervously watched this year's national health care debate. He says the Affordable Care Act made it possible for him to start his business. Now, uncertainty about the ACA's future is affecting his business's ability to grow.

In May of 2016, Stephanie was pregnant with their daughter Julie, and Stinson was working as a commodities risk consultant.

A few months before a baby's due date is typically not the time for a big career move, but it also happened to be when the lumber market seemed to offer a once-in-a-lifetime opportunity to buy low and sell high.

Encouraged by the availability of affordable insurance, the family took the plunge. Dean left his job and started his company.

The move paid off, as new construction boosted Dean's business far beyond what he imagined.

He's now ready to expand and bring on three or four new people, but there's a problem.

"There's a huge unknown with the ACA and what that's going to look like," Dean says.

President Trump and many members of Congress campaigned with promises to repeal and replace the Affordable Care Act, and they've spent much of this year attempting to do so.

That's meant hardship for Dean. He's having trouble convincing people with steady jobs and great benefits to take a chance and come work for him.

Repeal and replace efforts are again alive in the Senate, and the president has threatened to cut subsidies to insurers for to help pay for sicker, more expensive patients. That strain, on top of already unstable insurance markets, has led Dean to worry about whether decent insurance coverage will be available in the long run for him, his family, and potential new employees.

"What that's doing for me is preventing me to convince folks who are in a similar situation to where I was — a nice corporate job, making good money, with great benefits, with kids — convincing them to leave that to come work for me with no benefits," he says. "They're going to have to go on the individual marketplace, on HealthCare.gov just like I did and pick a plan."

Exactly how the ACA has affected entrepreneurs and job growth is still unclear, according to Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, based in Washington D.C. But there's been a sharp increase in entrepreneurial activity since 2013, when the insurance marketplaces started.

Baker says the ACA has helped entrepreneurs by leveling the playing field in the competition for hiring new talent.

Prior to the health law, entrepreneurs had been at a disadvantage compared with larger businesses who were more likely to be able to afford to offer insurance.

"Once [an entrepreneur's] workers are able to get insurance through the exchange, much of that disadvantage goes away," Baker says.

Baker says uncertainty is poison for any business, but all the questions about the ACA's future have made 2017 especially toxic for entrepreneurs.

"For a lot of small businesses, they are sitting there with some trepidation, saying, 'OK, how does this work out? Where are we a year from now? Where are we two years from now?' And presumably, at least some of them are going to be putting their plans on hold," Baker says.

Stinson Dean says that the lumber world once again is opening up some big opportunities, but he may not be able to take advantage of them. Dean worries he may be missing out on his chance to go big, even if the ACA survives this year.

"What about 2019, 2020?" Dean says. "These are the questions I'm being asked by these folks I'm trying to recruit, and I don't have an answer for them."

This story is part of a reporting partnership with NPR, KCUR and Kaiser Health News.

Copyright 2019 KCUR 89.3. To see more, visit KCUR 89.3.

SCOTT SIMON, HOST:

Right now, the Affordable Care Act is still the law of the land. It gave some Americans the comfort to start their own businesses because they didn't have to worry about keeping a job just for the health insurance. But this week's repeal efforts created uncertainty about whether those entrepreneurs could count on that insurance option in the future. From KCUR in Kansas City, Alex Smith reports.

ALEX SMITH, BYLINE: Stinson Dean of Independence, Mo., says when he started his company last May, he laid down a firm rule.

STINSON DEAN: One of the things I wasn't really willing to risk was the health of my family.

UNIDENTIFIED CHILD: Whoa, we're going to go fast.

SMITH: Dean is the proud father of three young children - two girls and a boy. And playing with them in his front yard, he and his wife, Stephanie, talk about the possibility of another. Stinson left a good-paying job to start his company buying Canadian lumber to sell in the U.S. At the same time, they were expecting their youngest daughter, Julie. It's a move he says was only possible because of the Affordable Care Act.

DEAN: I'm glad it worked out because it's been such a successful, you know, 15 to 18 months.

SMITH: So successful that he's ready to expand, to bring on three or four people, but there's a problem.

DEAN: There's a huge unknown with the ACA and what that's going to look like.

SMITH: The Affordable Care Act, or Obamacare, is still the law of the land. The Republicans are currently proposing far less generous coverage and subsidies in the ACA. And the president continues to threaten to cut payments for insurers. And many insurance exchanges remain on shaky ground.

DEAN: What that's doing for me is preventing me to convince folks who are in a similar situation to where I was - in a nice corporate job making good money with great benefits with kids - convincing them to leave that to work for me with no benefits, like, I'm not going to offer any benefits.

SMITH: Exactly how the ACA has effected entrepreneurs and job growth is still unclear according to Dean Baker with the left-leaning Center for Economic and Policy Research. There was a sharp increase in entrepreneurial activity in 2013, when insurance marketplaces started. He says that prior to the health law, larger companies were often able to offer health insurance and smaller entrepreneurs were at a disadvantage in attracting talent. But...

DEAN BAKER: Once their workers are able get insurance through the exchange, much of that disadvantage goes away.

SMITH: Baker says uncertainty is poison for any business. And 2017's health care battles have been especially toxic for entrepreneurs.

BAKER: For a lot of small businesses, they're sitting there with some trepidation, saying, OK, how does this work out? Where we are a year from now? Where are we two years from now? And, presumably, at least some of them are going to be putting their plans on hold.

SMITH: That's the case for Stinson Dean. He sees big opportunities ahead he's not sure he can take advantage of. He just can't promise potential employees they'll have decent insurance in the long run.

DEAN: What about 2019, 2020? So these are the questions I'm being asked by these folks I'm trying to recruit. I don't have an answer for them.

SMITH: The future of the current GOP plan to repeal Obamacare is still uncertain. A vote is possible this week. For NPR News, I'm Alex Smith in Kansas City.

SIMON: And that story part of a reporting partnership with NPR and Kaiser Health News. Transcript provided by NPR, Copyright NPR.