While most businessmen ponder ways in which they can make more money, Sydney Winlock, a resident of Northern California, strangely was searching for ways to earn less money from his business. Not that he does not like making profits, but earning too much money from the business was making him and his wife ineligible for their current health insurance policy. Winlock and his wife earn too much from their business to receive aid from the California government for paying the premiums on their health insurance every month.

Without aid from the government, the couple will now have to shell out $18,000 annually to maintain coverage under their health insurance. However, if they reduce their earnings, they would receive subsidies for their insurance on health and get help from the federal government for the monthly insurance.

“Last year, we had a great year. What did it do for us? It kicked us right out and we no longer get the subsidies,” said Winlock.

Just like Winlock, Laneesha Senegal, 42, is also struggling to keep her blood sugar levels from rising in the absence of insulin provided by health insurance. The 42-year old is the owner of a nonprofit that helps other businesses plan for the future, and just like Winlock, makes too much money to qualify for Medi-Cal but not enough to buy the Covered California health insurance. Senegal is prediabetic and tries her best to keep the blood sugar levels under control so as to avoid an expensive medical appointment thanks to the absence of a health insurance plan.

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Democratic Governor Newsom to Bring Good News for Small Businesses Owners in CA

small business on Health Insurance

California Governor Gavin Newsom’s latest economic plan can make it easier for small business owners like Winlock and Senegal to buy health insurance from the state’s insurance marketplace that was created under the Affordable Care Act. If this plan is reinforced, it would also help the employees of small businesses, as they would also be offered health insurance coverage through their employer.

According to Newsom’s plan, small business owners would get aid from the California government, making the state the first to offer subsidies to people who earn as much as 600 percent of the federal poverty level, to pay for their health insurance.

This means that individuals earning around $72,000 a year and a family of four earning approximately $150,000 annually would be able to avail subsidies of up to $100 per month from the government to pay for their health insurance premiums. Similarly, people earning between $24,000 and $49,000 annually would also get assistance from the state government along with the federal subsidies.

Currently, the federal government offers help only to those who earn up to 400 percent of the federal poverty line. This proposal is part of the new Governor’s budget, which is currently being negotiated by lawmakers.

How Would This New Healthcare Plan Affect California?

The UCLA conducted a California Health Insurance Survey and stated that out of the 2.84 million citizens of California who did not have health insurance in 2017, 16 per cent or 444,000 were self-employed. Currently, the people enrolled under the Covered California health insurance policy earning less than $49,000 get subsidies from the government to reduce their insurance costs.

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However, according to the federal Small Business Administration, the median annual income earned by small-business owners is approximately $57,000, which makes it impossible for them to qualify for Medi-Cal and get government subsidies on their monthly healthcare insurance premiums.
How Will the Money to Fund the Subsidies be Generated?

While Newsom is trying to get more healthy people to buy health insurance plans by offering subsidies, many people are asking where the money would come from to fund so many subsidies, in case this law gets passed. Well, according to Newsom’s plan, the California government would pay for the new subsidies by fining uninsured individuals.

Governor Newsom plans to impose fines on uninsured individuals under a proposed statewide insurance requirement to cough up the money for the subsidies. He estimates that the fines alone would raise around $330 million each year to fund the subsidies.

Larry Levitt from the Kaiser Family Foundation stated that the irony of the situation is that the subsidies that would help a section of people get health insurance would be funded by the people who live without it

This irony of the plan was not lost on the nonpartisan Legislative Analyst’s Office either. The office cautioned that as more Californians would sign up for health insurance, the pool of uninsured people would decrease and hence it would generate less and less money in the upcoming years.

However, Newsom has avoided this potential problem in his budget by eliminating new subsidies after three years, which means that the lawmakers will have to cast votes to keep them in action. Newsom stated to the press that while this is not a perfect solution for the problem, it is a pragmatic one and would be a great way to make more people buy health insurance policies.

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According to the California Department of Finance, approximately 840,000 people would be receiving subsidies on their health insurance premiums if this plan floated by Gov. Newsom comes into being. While the state of California would be the first to help self-employed small business owners buy health insurance by offering financial subsidies, it would not be the first state to re-establish the individual mandate. Massachusetts and New Jersey have already restored the individual mandate method before.

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