Small business professionals across America are paying close attention to how Congress handles changes to the nation’s health care system. To better understand how healthcare reform could affect this critical population, we analyzed 31,219 survey responses from small business owners on Thumbtack from our last five monthly Economic Sentiment Surveys. We then compared the responses of small business owners from states that had expanded their Medicaid programs to those that hadn’t. The results were striking:
- In Medicaid expansion states:
- The uninsured rate for small business owners was 21%
- 59% of small businesses want to keep or improve the ACA
- In non-expansion states:
- The uninsured rate for small business owners was 34%
- 50% of small business owners want to keep or improve the ACA
When comparing these uninsured rates, the difference means that expansion states have an uninsured rate 62 percent lower than states that haven’t expanded Medicaid. This difference is statistically significant at the 99 percent confidence level and controls for median household income on the state level.**
While it’s clear that the majority of small business owners in expansion states want to keep or improve the ACA, it’s not always just because it’s helped them acquire health insurance. Kim G., who owns an environmentally friendly cleaning company in Los Angeles, told us how the expansion made hiring employees easier for her business. “As a small business we aren’t liable to provide insurance, but when people are covered regardless of their employer, they are much more open to exploring new job opportunities,” says Kim.
These striking national results also hold up across individual states:
- 24 out of 26 Medicaid expansion states have an uninsured rate for small business owners below 30%
- 14 out of 17 Medicaid non-expansion states have an uninsured rate for small business owners above 30%
Certain small business owners go so far as to credit the ACA with making starting a business possible in their state. As Mike A., a wedding officiant in Oregon explains, “Health care costs held me from starting my own business and I know lots of people who are in the same position. Because of the ACA, they can cover themselves and be entrepreneurs.”
While many findings have been favorable, this analysis is not meant to suggest that the ACA’s Medicaid expansion has been strictly beneficial for small business owners. On the contrary, many of the small business owners we heard from are frustrated with the provision’s implications for their taxes. That was not a focus of this research, since those costs are typically less direct and therefore harder to quantify en masse. (Note: This research should not be interpreted as an endorsement of the ACA or its Medicaid expansion.)
Our findings are clear, though: this specific provision has helped thousands of small business owners and self-employed workers in the U.S. acquire health insurance.
* Our analysis only includes the 43 states with at least 40 observations. The states not meeting this criteria—Alaska, Montana, North Dakota, Vermont, West Virginia, South Dakota, and Wyoming—were excluded. The first five expanded their Medicaid programs, while the last two have not.
** This was determined by a Welch Two Sample t-test, with an alternative hypothesis that the true difference in means is not equal to 0. We controlled for median household income using an ordinary least squares regression, with the share of respondents on government-provided health insurance and the share of respondents without any insurance as the dependent variables.
About the Thumbtack Economic Sentiment Survey
Every month, the Thumbtack Economic Sentiment Survey captures the attitudes and perspectives of thousands of business owners from across the country to gauge how they are feeling about the economy and their businesses. Now in its fifth year, this survey provides a unique vantage point on the economy, as respondents are largely mobile service professionals with five or fewer employees who operate across the United States. Because they are hard to reach, these professionals are frequently overlooked in other surveys of small businesses.