Image: www.corporatewellnessmagazine.com 

Quietly and with little fanfare, health insurance exchanges are in development under the Affordable Care Act.  Barring a Supreme Court fiasco they are scheduled to debut in 2014.  On Tuesday, 12 more states completed their first-stage planning processes, making them eligible for additional funding, according to the Obama administration as reported by the Wall Street Journal.  This brings the total number of on-track states to 28.  Not bad so far.

            Unfortunately, the exchanges, state-based or run by the feds, will be too little too late for the millions of long-term unemployed workers who have responded to their dilemma by going into business for themselves.  Some are gardeners, or handypersons.  Some are copywriters or marketing professionals. Some paint houses.  Others work as independent contractors, crunching data or numbers from their kitchen tables and bedrooms.  Some launched catering businesses.  Some have described their brilliant second acts right here on Open Salon.  Nearly all of these businesses are sole proprietorships—personal paycheck businesses.  They are job creators by creating their own jobs.  The number of jobs they have already created dwarfs the number of jobs created by one-percenter millionaires and billionaires in the last 36 months.

            These people are true urban and suburban pioneers, responding to necessity with invention.  They are disproportionately over the age of 50, the invisible cutoff point after which being a person of a certain age spells mass rejection from youth-biased HR offices.  Self-employment is a way back to self-respect and self-reliance even if for many the dollars earned are sharply reduced in the equation.

            Self-employment and independent contracting has become perhaps the only force for redemption in this job-starved so-called recovery.   And what is the biggest drawback; risk to life, limb and (now-diminished) fortune in the bargain?  The unconscionable unavailability of health care insurance at an affordable price.  And for America’s self-styled micro-entrepreneurs, 2014 is long, long way off.

            The dominant solution is to find a partner with benefits.  In fact, the solution is so compelling, I’m surprised there aren’t more “health care marriages” in the U.S.; you know, of the same variety as “green card marriages.”  Barring a partner with benefits, one confronts an array of health insurance “starter plans” that offer major medical coverage and some routine care for under $200 a month—if you are in your twenties.

            If you are in your forties or fifties and don’t have some kind of pre-existing condition you are in the minority, but you will still spend a hefty chuck of change for a barebones policy—and who can afford COBRA even when it is offered?  With corporations unwilling to hire, I’m pretty sure the only way to grow employment in America is to reduce the regulations preventing uninsured individuals from gaining access to subsidized health exchange-type policies.  Wouldn’t it be nice if for once a reduction in regulations would serve a socially useful purpose?

A Little Known Option for People with Pre-Existing Conditions

            One option for people with pre-existing conditions might work for those who can afford to spend $2,600 - $8,000 a year.  It is known as the Pre-Existing Condition Insurance Plan (PCIP).  Created under the Affordable Care Act, PCIP is provided through the U.S. Department of Health and Human Services.  Some states offer state-based plans while others rely on the feds.  In Minnesota, for example, the Standard option of the state-administered plan costs $221 for a person between the ages of 45 and 54.  The plan requires the individual to spend $2,000 in out-of-pocket expenditures before benefits kick in, and then it pays at 80 percent.  The plan works fine if you don’t get too sick.  If you do, it protects you against catastrophic outcomes like medical bankruptcy, because once you have spent a $6,000 out-of-pocket maximum it covers everything.

            While far from perfect, such a plan is a far cry better than being shut out of the insurance market altogether. And at $221 a month, the initial buy-in is only $50 a month more than people in their 20s would pay for a mid-priced starter plan. 

            Beyond that, a few states, like New Mexico, offer co-op plans. The National Association for the Self-Employed offers plans, though you must pay a $70 a month membership fee to gain eligibility, and their plans still aren’t what I would call reasonably priced.  If you are making very little money and fall below the federal poverty level of $29,327 for a family of four, Priva Nembhard points out in the blog Entrepreneurrookie that “you might be eligible for medicaid benefits.” If you are a single person who earns below the federal poverty line of $10,400 a year, you are still out of luck with Medicaid until 2014.  I know.  It’s this space between the rock and the hard place.

Beyond these limited options, it’s a desert out there, populated—at best—by health savings accounts buttressed by catastrophic care policies with $5,000 deductibles.  But does anyone in the pre-presidential arena talk about health care coverage as a job-enabling mechanism? Nada.  This is all the more odd because the primary Republican proposals for job creation—low taxes and less regulation—don’t create jobs either, and the job-enablement that would be caused by kick-starting individual health care policies would far outstrip these two canards in its direct effects.

That said, it’s hard to figure what a self-employed single mom in her forties with a minor pre-existing condition and two kids and would pay for insurance under the health exchange system.  The system offers subsidies based on income, but it needs to benefit people on the threshold of the middle class, which is to say well above the federal poverty line, to make a difference.  Can this single mom afford to spend 20 percent of her gross income on health care insurance and medical bills?  That would be $8,000 a year.  The Massachusetts system of RomneyCare might get that number down to $6,500 a year for the insurance alone; it’s still a major budget squeezer either way.

In the interim, between now and 2014, we should be talking about tax breaks—credits even—for medical insurance expenditures paid by the self-employed, but I realize how complicated it is to ramp up anything to serve eligible workers on a national basis.  We sat on our hands for years, now we have this trend of burgeoning self-employment and we can’t do a thing about the most serious financial and health threats they face cuz we didn’t think of it.  Oh well, eh?

But we do have the Affordable Care Act, and late is better than never, and if anyone thinks the law won’t make a shred of difference, send ‘em this link and ask ‘em if they know anyone who is self-employed and lacks medical care.  And if the Supreme Court overturns the law and it’s back to square one, then I think I have a little issue that may interest Occupy America—and the millions of newly self-employed voters of America in 2012.