You desperately want to change careers, but don’t want to risk it knowing you may lose your health insurance. You’ve thought about heading out on your own, but you know you couldn’t afford insurance for yourself or your employees, so you stay put.
This is a familiar reality for millions of Americans; so much so, it even has its own name—“job lock.” A 2009 analysis of small business data from 21 economically advanced countries by the Center for Economic and Policy Research (CEPR) ranked the United States near the bottom in terms of the size of our small business sector in proportion to the size of our country. Although there are many factors which may have contributed to the ranking, many economists believe the United State’s health care system plays a major role in stifling small business growth.
However, with the passing of the Affordable Care Act and the implementation of health insurance marketplaces known as “exchanges” in each state by 2014, job lock may finally be a thing of the past.
Through state exchanges, people will be able to purchase quality, affordable health insurance. And through the Affordable Care Act, low-income consumers will get the help they need, in the form of subsidies, to afford coverage in the exchange. In addition, small business owners are now eligible for a 35 percent tax credit towards the cost of their employees’ health insurance premiums. This tax credit will increase to 50 percent in 2014, at which time business owners will also be able to buy insurance in the small business exchange, which will provide them the same kind of purchasing leverage as much larger companies.
There’s nothing more American than starting your own business, but the threat of losing health insurance has kept many Americans from fulfilling their entrepreneurial dreams. For the millions of Americans dreaming of starting their own business, having the ability to purchase affordable, quality insurance for both themselves and their employees will allow them to do so and will also help spur economic growth.