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Oklahoma’s small business innovations on the line if ACA subsidies expire, experts say

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Oklahoma’s small business innovations on the line if ACA subsidies expire, experts say

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Oklahoma could see less entrepreneurship and fewer small businesses if the federal government doesn’t renew enhanced health insurance subsidies introduced during the Biden administration, according to business and health policy experts.

In 2021, President Joe Biden signed the American Rescue Plan Act introducing subsidies that expanded eligibility for premium tax credits to Affordable Care Act Marketplace enrollees with incomes 400% above the federal poverty line. The Inflation Reduction Act, signed into law in 2022, extended those subsidies through 2025.

That same year, 3.3 million business owners and self-employed adults obtained health insurance through the ACA Marketplace, representing 28% of enrollment among working-age adults, according to the U.S. Department of Treasury. In Oklahoma, about 39,000 self-employed workers and small business owners had Marketplace health insurance coverage in 2022. That’s 29% of Marketplace enrollment in the state.

More: Despite health care labor growth, minorities need better access to care, advocates say

Over 2.7 million, or 82%, of self-employed workers and small business owners claimed the premium tax credit. This includes nearly 300,000 taxpayers with incomes over 400% of the federal poverty line. In Oklahoma, 88% of self-employed adults and small business owners with Marketplace coverage claimed premium tax credits.

Bills seeking to make permanent the enhanced subsidies were introduced in Congress earlier this year, but it’s unclear if a Republican-controlled House, Senate and presidential administration would take action.

It seems likely that the federal government will let them expire, said Daniel Sledge, an associate professor of Health Administration and policy at the University of Oklahoma.

In 2017, then-President Donald Trump attempted to repeal and replace the Affordable Care Act, and recent statements from the next president point toward similar strategies.

People could be less likely to take risks, start businesses if subsidies expire

Sledge predicts that if the subsidies cease to exist, the number of insured Oklahomans would decline, and fewer people would launch small businesses in a state where entrepreneurs are advocated for among top politicians.

Oklahoma Gov. Kevin Stitt recently called the Oklahoma “the most business friendly state in the nation.”

Forbes Advisor lists Oklahoma at No. 20 in the best states to start a business in 2024. The publication also named the Oklahoma City metro area the second-least risky city for small businesses.

More: Oklahoma City ranked 2nd-best place for small businesses nationwide

But if affordable health care insurance is harder to access, people will be less likely to take risks, Sledge said.

“If we have a business environment where people are less likely to take risks, it’s pretty likely that you’re going to see less innovation,” he said.

If subsidies expire, the number of insured Oklahomans could plummet further

Small business owners and entrepreneurs could even opt to go back into the labor force for employer-based health insurance, said Erika Lucas, co-founder of StitchCrew, an organization connecting women and marginalized entrepreneurs with the capital and resources to launch companies.

If the enhanced subsidies expire, the state could see the number of insured Oklahomans fall even further, she added.

With 11.4% of Oklahomans uninsured, the state ranked second-to-last in health insurance coverage, according to the non-partisan health policy organization KFF, formerly known as the Kaiser Family Foundation.

Health insurance could become a larger chunk of an entrepreneur’s expenses, Lucas said, which could substantially affect folks with families.

“It’s definitely a significant cost that they’re going to have to incur and figure out how to pay for it if they’re not receiving any government support,” Lucas said.

More: Oklahoma ranks among worst for mothers, children due to ‘maternity care deserts’ report says

She believes women and marginalized groups with small businesses would be disproportionately affected considering their existing lack of access to capital and resources.

“We always say that we want to be pro-business, but what do we mean by pro-business?” Lucas asked. “Do we mean pro-business in support of large companies, or do we mean pro-business as it relates to entrepreneurs and small business owners?

“If we are to include entrepreneurs and small business owners, then we should make it more affordable for them to be able to launch and grow companies.”

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