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STATEMENT

of the

Honorable Grace Meng, Ranking Member

Subcommittee on Contracting and the Workforce

Hearing on the Affordable Care Act and the Self-Employed:

Thursday, March 6, 2014

The Affordable Care Act introduced numerous reforms to the insurance market for both individuals and businesses.  In this committee, we’ve focused on the effect the law has on small business employers.  Today’s hearing will allow us to turn our attention to the self-employed. 

Under the law, these business owners have access to the individual marketplace rather than the SHOP exchanges.  Regardless of which market they use to obtain health insurance, these entrepreneurs remain integral to our global competitiveness, innovation, and growth. And that is why considering how the health care law affects this group is critical to their success and the nation’s continued recovery.

Prior to the law, the self-employed had to rely primarily on catastrophic plans.  These limited plans provided very basic coverage and for that reason, many were eliminated.  The individual exchanges took their place.  This marketplace provides guaranteed health benefits and maximizes the ability to effectively pool participants, resulting in more competition and lower costs. 

Over 6 million uninsured self-employed individuals will shop and purchase health insurance on these new markets. In fact, the most recent enrollment data indicate that roughly 4 million people have now signed up for a private health insurance plan through the marketplaces since October 1.  

But enrollment hasn’t occurred without a few hiccups.  Like small businesses with employees, the self-employed have faced some questions in their attempts to enroll.  This hearing will give us a chance to hear some personal experiences with enrollment and gather information on how it could be improved.  

While we know cost is one issue, the ACA is acting to balance premiums for those who once paid higher rates just for having a pre-existing condition.  Through modified community rating, guaranteed essential health benefits, prohibition of pre-existing condition exclusions, and standardization of cost-sharing burdens, coverage under the ACA is expected to create more stable premium pricing. 

Despite this stability, many self-employed business owners may still experience an increase in the cost to buy insurance coverage.  However, these costs are mitigated by premium subsidies – one advantage of using the individual marketplace – to help offset the cost of premiums. About 11 million uninsured Americans may be able to pay $100 or less per person for coverage purchased through the Marketplace using the premium credits.  Many of them will be the self-employed who could never afford coverage before the ACA.

As more Americans gain quality health coverage, job lock will be reduced.  This newfound freedom allows more Americans the ability to take risks and start their own businesses, spurring innovation and economic growth.  One study estimates that the ACA will lead to an 11 percent increase in self-employment.

But the fact remains that any impact of the ACA cannot immediately but known as it takes time to implement the law and allow employers the chance to enroll.  Purchasing health insurance, regardless of your business structure, is complex and many factors must be considered. We are here to today to learn more about those factors.  In order to ensure the success of our self-employed, we must understand the challenges and benefits the law has for entrepreneurs.  I thank all the witnesses for being here today and I look forward to your comments.

Thank you and I yield back.

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