Small Business Group Encourages Supreme Court to Uphold Affordable Care Act Tax Credits for All States

Small Business Majority urges the U.S. Supreme Court to uphold the Affordable Care Act as it begins to hear oral arguments today about whether the Affordable Care Act should allow consumers in states with federally run health insurance marketplaces to receive federal tax credits to help offset the cost of insurance.

Eliminating those credits would lead to a return of "job lock" which shackled many would-be entrepreneurs to jobs working for others rather than starting their own businesses. Employment and access to affordable health insurance historically have been tightly linked. That linkage pressures individuals to seek out and remain in jobs that provide affordable health insurance, even if they would otherwise choose to start their own business or pursue a more attractive job opportunity with a growing small business. This phenomenon is known as "job lock."

Small Business Majority filed an amicus brief in support of upholding the healthcare tax credits to consumers in all states, instead of limiting it to only consumers in state-run insurance marketplace exchanges. The brief states the law's marketplaces and subsidies, which enable access to affordable health insurance irrespective of employment, "go a long way toward mitigating job lock and freeing individuals to make life choices about employment, entrepreneurship and family care without forgoing affordable healthcare."

If the tax credits were available in only state-run marketplaces, an estimated 9.6 million people who bought insurance through HealthCare.gov would loose their subsidies, according to a recent RAND report. What's more, a report from Robert Wood Johnson Foundation found 1.5 million people will launch their own business and become self-employed because of provisions in the Affordable Care Act that will make purchasing insurance on the open market more accessible. The opportunity for these millions of people to strike out on their own would go by the wayside if the Court eliminates the subsidies from federally run marketplaces.

The health insurance marketplaces are the most important component of the Affordable Care Act for entrepreneurs, and it's critical they are kept as robust as possible. Diminishing them in any way, including by limiting the number of consumers who could claim a tax credit, would be a blow to the economy that we can't afford.