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Support: Provide Health Care Options for Early-Stage Entrepreneurs (Federal, State)

The need for health insurance can prevent entrepreneurial risk-taking, contributing to “job lock,” a situation in which employees stay at their current jobs because leaving would result in the loss of benefits they value. To reduce the effects of job lock, policymakers should:

  • Facilitate the development of a system of portable benefits that follow workers as they move across jobs or out of the workforce to start a business.
  • Provide tax incentives to new businesses to offset health care costs.
Supporting Evidence
  • Among those who have seriously considered entrepreneurship but ultimately decided against starting a business, 20% cited the need for health care coverage as a reason. Women were more likely to identify this a reason for not pursuing entrepreneurship than men were.
  • A 2010 study found that increased tax deductions for health insurance for self-employed workers increased the likelihood of new business creation.
  • Research found that prior to the passage of the Affordable Care Act (ACA), self-employed workers were twice as likely to be uninsured, and workers who had employer health insurance were 2.5 to 3.9 percentage points less likely to create a new business.
  • Furthermore, research shows the ACA has led to a 3% to 4% increase in self-employment.