Workforce Development

Health insurance portability key for independent workers’ access to coverage

February 22, 2017  • Natalie Foster & Libby Reder

New data from HHS and Treasury show that 1 in 5 customers of the Health Insurance Marketplace in 2014 were small business owners or self-employed, and independent workers were three times more likely to use Affordable Care Act coverage than other workers. A new blog post from Aspen Future of Work Fellows Libby Reder and Natalie Foster looks at this data in the context of the changing nature of work.

America has historically relied on employers to provide workers with health insurance, retirement, short-term disability insurance, and other benefits. In the era of full employment and stable employment relationships, this approach worked.

But these traditional employment relationships are becoming less common in the United States. A 2015 GAO study found that those working outside of a traditional, full-time employer-employee relationship (defined by the GAO broadly to include those in alternative work arrangements – such as self-employed workers, on-call workers, agency temps and contractors – as well as standard part-time workers) comprised 35.3% of employed workers in 2006 and 40.4% in 2010. According to economists Alan Krueger and Lawrence Katz, the share of workers in alternative work arrangements increased by more than half between 2005 and 2015, and these 10 million new contingent jobs accounted for 94 percent all of the net new job growth during that time period.

The consequence of this trend is that public policy must provide access to “portable” benefits — that is, benefits provided outside of the traditional employment relationship, which the worker can take with them from job to job or project to project.

The Affordable Care Act was the most recent attempt to provide independent workers access to portable benefits, and according to new data from the Departments of Treasury and Health and Human Services, it appears to have been successful in this regard. The data show that 1 in 5 customers of the Health Insurance Marketplace in 2014 were small business owners or self-employed. Moreover, independent workers are almost three times more likely to rely on the Affordable Care Act coverage than other workers, with workers using online labor platforms being especially reliant on the Affordable Care Act marketplace.

This coverage provided by the Affordable Care Act matters for two primary reasons. First, it provides independent workers with access to healthcare and better financial security. This is particularly important for the workers who work independently by circumstance, not by choice. As the Wall Street Journal recently reported in its article, The End of Employees, “Never before have American companies tried so hard to employ so few people.” For those who have been pushed against their wishes into alternative work arrangements, such as working as contractors, agency temps or on-call workers, affordable health coverage is a critical element of a basic safety net – and often not something they can access through their employer. Low-wage workers are especially vulnerable, as they generally do not have significant savings to cover unexpected medical bills.

Second, coverage promotes entrepreneurship. Being self-employed entails considerable risk, and without a reliable, affordable health coverage option available outside of an employment relationship, would-be entrepreneurs might not make the leap to start their own businesses. Last month, Y Combinator, Silicon Valley’s most successful tech accelerator, published the stories of dozens of entrepreneurs who have accessed health coverage through the Affordable Care Act. That piece included stories like that of Dan Carroll, founder of the ed-tech startup Clever, who has lived with Crohn’s Disease for a decade and wouldn’t have been able to afford health insurance while bootstrapping his company without joining his parents’ plan at age 26.

As the 115th Congress considers whether and how to reform the Affordable Care Act, it should ensure that all individuals continue to have access to affordable health insurance plans, regardless of where and how they work. Let’s modernize our safety net and make benefits and protections more portable, not less.