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INNOVATION IN GUARDED CONDITION? Entrepreneurs are holding back, wary of Obamacare repeal, loss of health insurance

Rita Chesterton left a full-time teaching job with health benefits in 2014 to launch Skaffl LLC, a startup that created mobile apps for the kindergarten-12th grade education market.

Rita Chesterton left a full-time teaching job with health benefits in 2014 to launch Skaffl LLC, a startup that created mobile apps for the kindergarten-12th grade education market.

Chesterton said she could not have taken the risk to become an entrepreneur without health insurance through the Affordable Care Act, also known as Obamacare.

But with President Trump and congressional Republicans intent on repealing the ACA and the details of a replacement plan unknown, some worry it could have a chilling effect on entrepreneurship. Innovators who want to strike out on their own to develop a new product or service may hesitate leaving a job with benefits, and that, in turn, could hurt progress and job creation in America.

Pennsylvania has one of the highest rates in the United States for entrepreneurs with health insurance through Obamacare, according to recently released data from the U.S. Treasury Department. In Pennsylvania, about 86,000 people, or 22 percent who signed up for the ACA in 2014, were small-business owners or self-employed individuals.

Nationally, 1.4 million people, or one in five with insurance through the ACA, were small-business owners or self-employed.

June Clougher, director of Jump Start Incubator in Reading, said the uncertainty surrounding a repeal of Obamacare is inhibiting people from striking out on their own to start businesses in favor of so-called “job lock,” staying in jobs because they offer health insurance. A 2009 Harvard Business School study estimated that 11 million people were stuck in jobs because they needed the health insurance.

“I think in some cases it is stopping people from taking the plunge,” Clougher said.

“In other cases, they are already involved in their small business and now they are just keeping their fingers crossed there are going to be options when the changes are put in place,” she said.

The ACA provision that enabled young adults up to age 26 to get coverage through their parents’ health insurance may have spurred some of them to become entrepreneurs. A 2013 study found that after the ACA took effect, young people 19-25 were more than twice as likely to start their own businesses.

But what about older entrepreneurs who are not covered by a spouse and must find health insurance on their own?

Wendy Solomon

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