Jakarta Globe, Bloomberg, Mar 23, 2015
More than 90 new health-care companies employing as many as 6,200 people have been created in the United States since Obamacare became law, a level of entrepreneurial activity that participants say may be unprecedented for the industry.
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| A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website in New York in this October 2, 2013 photo illustration. (Reuters Photo) |
More than 90 new health-care companies employing as many as 6,200 people have been created in the United States since Obamacare became law, a level of entrepreneurial activity that participants say may be unprecedented for the industry.
Zenefits,
which provides human-resources software and acts as a health-insurance broker
for small employers, wouldn’t exist without the law, said Parker Conrad, the
firm’s chief executive.
Since the
Affordable Care Act’s inception in April 2013, the San Francisco-based company
has grown to more than 900 employees.
That makes
it the largest firm among dozens that have sprouted in the law’s wake,
according to PricewaterhouseCoopers, which issued a report on the trend this
week.
The health
law, which took full effect in 2014, represents the most dramatic change to the
US health system in 50 years.
Entrepreneurs,
including some from within President Barack Obama’s administration, have
founded companies that target employers, health insurers, hospitals, doctors
and consumers looking to navigate new requirements and possibilities.
“There’s a
lot of opportunity for new market entrants,” Zenefits’ Conrad said.
“The ground
is literally shifting under the feet of the incumbents.”
Conrad, a
cancer survivor, said that after reading the Affordable Care Act cover-to-cover
and talking to insurance experts, he realized it offered an opportunity to ease
the process of pricing, selling and managing health insurance for small
businesses.
Zenefits,
which has 10,000 clients, can “spit out pricing” for every health insurance
plan in a state “in milliseconds,” using only the ages and addresses of
employees, he said.
Opponents
of the Affordable Care Act have continually warned of the law’s potential
effect on US jobs, with Republican John Boehner of Ohio, the House speaker,
frequently calling it “the president’s
job-killing health-care law.”
The
American Action Forum, a nonprofit advocacy group that opposes the law, has
blamed it for reducing pay at businesses with 20 to 99 employees by about $22.6
billion annually.
Still, the
act became law just as the nation’s employment figures began to improve. On
March 6, the Bureau of Labor Statistics reported that the United States added
295,000 jobs in February and the unemployment rate fell to 5.5 percent, the
lowest level in about seven years.
The economy
has added at least 200,000 jobs for 12 straight months, the best run since a
19-month stretch that ended in March 1995.
“The claim
that the Affordable Care Act is a job-killer is just factually untrue,” said
Bob Kocher, a doctor and former Obama adviser who is now a partner at New
York-based venture capital firm Venrock Associates.
The law has
“created the most enormous opportunity to build health-care companies ever,”
Kocher said.
His firm
has invested in eight such startups, including a Bethesda, Maryland-based
company started last year by another former Obama administration official,
Farzad Mostashari.
His
company, Aledade assists doctors looking to take advantage of a program in the
health-care law that offers higher payments under Medicare, the insurance plan
for the elderly and disabled, if they can reduce the cost of caring for those
patients without harming their health.
Mostashari
didn’t return a phone message left at his office.
The US
health secretary, Sylvia Mathews Burwell, made an appearance on Sunday at Rock
Health, a venture capital fund in San Francisco that backs health-care
companies, to promote the health law’s benefits for entrepreneurs.
Since 2012,
the Health and Human Services Department has hosted an annual event it calls
“Health Datapalooza” to encourage entrepreneurs to use its resources.
The
Affordable Care Act has “provided funding for us to make more investments in
data and make that data available to the private sector to help find solutions
to some of our biggest challenges through innovation,” Burwell said in San
Francisco, according to a transcript distributed by her department.
In the five
years prior to the law “you don’t get anywhere close” to as many startups in
the health-care industry, said Ceci Connolly, managing director of
PricewaterhouseCoopers’s Health Research Institute, which published the report.
“There
really is a stark difference,” she said. “We thought it was striking how many
entrepreneurs said to us, ‘This has sparked innovation and entrepreneurship.’ ”
Omada
Health, a San Francisco-based company that helps employers and insurers prevent
diabetes and cardiovascular disease in high-risk individuals “is a direct
result of the ACA,” chief executive Sean Duffy said.
The
company’s online service uses prevention techniques that were developed by the
Centers for Disease Control and Prevention under a little-known program funded
by the health-care law, Duffy said.
Some
companies give only partial credit to the Affordable Care Act.
They also
were formed because of a related law passed a year earlier that provided
federal money for hospitals and doctors’ offices to buy electronic record
systems.
Bloomberg
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