It's one of the first things people ask you when you tell them about your new job: What are the benefits? Health insurance is such an integral part of life that people take jobs just so they will be guaranteed issuance. Now that the Affordable Care Act application process is up and running, people have been buzzing about how it will affect their lives. Startups and entrepreneurs, though, have the potential to be the biggest winners come January when the Obamacare plans go into effect. Chris Mihm, owner of Medicoverage, believes that for a few different reasons the Affordable Care Act is going to revolutionize startup hubs around the country.
"Group insurance offers guaranteed issuance – every single employee will get approved no matter if they have cancer or any pre-existing condition of any type," Mihm said of the way health care traditionally worked. "On January 1, 2014, every single person who signs up for insurance is guaranteed issuance. So even if you have a pre-existing condition, you’re going to get approved at the same rate as me. That changes everything. And it brings the question that every founder needs to ask themselves: Do I want to offer health insurance to my employees as a group plan? Before, there were some strategic reasons why you’d want to do it."
Now that everyone has guaranteed access to health care, it will no longer be used by businesses as leverage to recruit talent. Startups will be able to bring in innovative thinkers who before feared working for a small business without health benefits because now they can access insurance themselves. Additionally, for small companies with fewer than 50 employees, they will not be required to provide insurance allowing them to pay their employees what they're worth.
"Now, if you’re a CFO and you want to leave your company, you can walk, buy an Obamacare plan with guaranteed issuance and you could come onboard a small startup," Mihm said. "I believe there will be a pent up group of individuals who have been dying to start companies but have been afraid to leave their existing company. It’s going to level the playing field. Small companies will be able to attract talent without having to offer health insurance."
On top of that, if startup teams struggle to make money while they grow their businesses, Obamacare will offer subsidies to make plans cheaper.
“You’ll pay significantly less as an entrepreneur making no money than somebody who has a large income," Mihm said. "You couldn’t ask for a better scenario for someone starting up.”
Obamacare will also be crucially important to those who have their fingers crossed, forgoing health insurance in hopes they don’t have any ailments, which Mihm said many founders often do.
“I would argue the number one cause of bankruptcy in America is not having health insurance," he said. "If you believe in your company, why are you putting yourself at risk for bankruptcy?”
Mihm is nothing but optimistic about the affect the Affordable Care Act will have on entrepreneurship, even though the law has created direct competition for his company. Obamacare's online exchanges essentially do the same thing Medicoverage has been doing the past 10 years. It will be exciting to see how people will react to no longer being handcuffed by health insurance. If Mihm – who is extremely knowledgeable both about startups and health coverage – is right the startup ecosystem here in D.C. could explode come January. Perfectly timed with the recent antics of the federal government, experienced employees who are fed up with the shutdown will no longer be locked into a job because it offers great health care. Now they can get that anywhere, giving them the chance to explore a life of innovation and disruption within the startup world.
