By Mark Miller
Tribune Media Services
Could health reform unleash the inner entrepreneur in millions of older workers?
There's plenty of evidence that baby boomers in their 50s and early 60s want more independence and flexibility in their work. Many are ready to take a risk via second careers and entrepreneurial ventures-but have been hanging on to jobs solely for health insurance benefits. They won't qualify for Medicare until age 65, and it's difficult to get affordable, quality coverage outside of employer group plans.
And while health insurance issues affect Americans of all ages, the problems are acute for people over 50, who tend to have more pre-existing conditions than younger people do, and use more health care.
The new health care reform law aims to help-over time-by creating private insurance exchanges that are intended to provide access to affordable, quality coverage for people without access to group plans. The exchanges will begin operating in 2014; in the meantime, many states are creating high-risk insurance pools intended to provide bridge coverage until the exchanges are up and running.
I've been harboring a hunch for some time: If the exchanges work as designed, it could give older workers the assurance they need to head for the exits of Corporate America and into the land of self-employed entrepreneurship. Older Americans already have the highest rate of new business formation in the country, according to the Kauffman Index of Entrepreneurial Activity; many of those new businesses are individuals hanging out a shingle to work on their own.
That's why a newly published research brief investigating the relationship between health insurance and older workers locked into their jobs really caught my eye. The brief, from the Center for Retirement Research at Boston College, looks at whether universal health coverage will spur greater employment mobility by examining the impact of an actual expansion of coverage implemented by the U.S. Department of Veterans Affairs in the 1990s.
The VA reforms provided a dramatic expansion of coverage. "It changed from a system that was mainly an in-patient system with catastrophic coverage to look like real health insurance," says Joanna Lahey, a co-author of the report (http://bit.ly/9i9fKI) and an assistant professor of public policy at Texas A&M University. "Veterans could get things like flu shots, and the coverage was opened up to all veterans, not just those below certain thresholds. It even offered a prescription drug benefit."
The report concludes that more educated workers did, indeed, take advantage of the expanded health coverage to move to self-employment-the specific increase was 8.4 percent compared with the period before the VA reforms were implemented.
Lahey notes that VA benefits are provided at no charge, but she thinks national health reform will lead to similar results. "Surveys of boomers say they want part-time work options with autonomy. But prior to health care reform, there was no way for most of them to get insurance, even in the private market. So if reform does provide a good option for affordable coverage, we're going to see a decline in job-lock."
This means that older workers burned out on careers they've been hacking away at for 30 years or more will gain the freedom to strike out on their own. Some will continue to serve the industries where they've worked, while others will launch into entirely new encore careers.
Dr. David DeLong, an expert in organizational behavior, thinks the big challenge with health reform will be educating older workers on the changes that are coming. "I find many are oblivious to the health insurance challenges until they actually retire."
DeLong is the author of "Lost Knowledge: Confronting the Threat of an Aging Workforce" (Oxford University Press, 2004). He has studied the challenges aging boomers face in the job market, and has interviewed hundreds of workers and employers.
"But if you can show older workers that they can get quality health care as a self-employed person, there will be a percentage that say, 'You know what? I'm 55 years old-I'm out of here.' If the picture is clear and they see that they have options, it will be a huge trend."
Mark Miller is the author of the forthcoming book, "The Hard Times Guide to Retirement Security." He publishes http://retirementrevised.com, recently named the best retirement planning site on the web by Money Magazine. Contact him with questions and comments at email@example.com
This column was originally printed in the October 10, 2010 - October 23, 2010 edition.