The impact of Medicaid expansion on small business owners in Colorado

Small Business Majority
Thursday, March 18, 2021

The passage of the Affordable Care Act (ACA) enabled states to expand Medicaid eligibility to a broader swath of people. Medicaid expansion raised the maximum income of which individuals could make to qualify for the state-administered programs, increasing access to workers and entrepreneurs who may have previously been unable to afford private insurance but who earned too much to qualify for Medicaid.

Small business owners, their employees, and self-employed entrepreneurs have benefited from the ACA and Medicaid expansion, as more than half of ACA marketplace enrollees across the nation own or work for a small business. In states that expanded Medicaid, the percentage of small business employees covered by Medicaid increased from 9.1% to 13.4% from 2013 to 2016; the number of self-employed individuals covered rose from 7.3% to 11.6% during the same time.

In 2014, Colorado was among the first states to expand Medicaid. Raising the maximum income cap for Medicaid-eligible residents cut the state’s uninsured rate by nearly half between 2013 and 2015. The number of Coloradans without health insurance dropped from 14.3% to 6.7%. Since then, the uninsured rate has generally held at 6.5%. Medicaid expansion has filled a gap for working Colorado adults whose income makes them eligible for Medicaid and whose employers don’t offer health insurance. Of Colorado adults enrolled in Medicaid, 65% are employed.

While the ACA and Medicaid expansion have helped small business owners and self-employed workers gain access to health coverage, the cost of private insurance and affordability of care remain a top concern among small business. Monthly premiums and annual deductibles can be a heavy burden, both for business growth and the health of their employees. Colorado has taken important steps to expand access and address affordability, yet thousands remain uninsured, including many entrepreneurs and small business employees.

In a recent survey, small business owners stated they believe that policymakers and elected leaders don’t understand their unique needs, and they identified healthcare costs as a top barrier to business growth. During a series of three focus groups across the state of Colorado, we facilitated discussions with a variety of small business owners and self-employed workers to better understand their personal experiences that could inform policy conversations regarding Medicaid expansion, healthcare costs and coverage.

These roundtable discussions occurred while COVID-19 dramatically impacted business and local economies. While the pandemic’s effect was often brought up by participants, this issue brief focuses on the broader impact of Medicaid expansion and of small business owners’ experiences and observations about Medicaid expansion and health insurance.