SAN FRANCISCO — Republican plans to scrap Obamacare and roll back its Medicaid expansion are sending tremors through the burgeoning "gig economy" — and nowhere more so than in California.

With the Silicon Valley and on-demand companies like Lyft and Uber in its backyard, the Bay Area will be a laboratory for determining whether repeal efforts shift employment away from temporary jobs and startups into more traditional employment — potentially dampening innovation.


As goes California, so might go the rest of the nation in an economy increasingly built around temporary jobs, freelance gigs, part-time work and entrepreneurial ventures — arrangements that typically lack health care and other benefits.

A new report by the nonpartisan Congressional Budget Office showing the number of uninsured people growing by 24 million in a decade under the GOP plan to repeal the health law fuels concerns that more Americans will suffer "job lock" — meaning they won't leave their jobs for fear of losing health coverage. As a result, the repeal plan could stifle entrepreneurship and small business creation widely credited with driving economic growth.

“Lawmakers who dream of gutting the Affordable Care Act do not seem to care about its importance to small business owners, particularly those who are solo entrepreneurs," John Arensmeyer, founder and CEO of Small Business Majority, wrote in a Health Affairs blog post. "What these politicians fail to understand is that the health care law is the first meaningful insurance reform available to entrepreneurs in decades. In fact, for many self-employed business owners, their firms would not exist without it.”

Concerns over health benefits hang over Lisa Nieves' dreams of starting her own business. The Oakland, Calif., resident, who was covered under Obamacare's Medicaid expansion most of the past two years, is trying to open a worker-owned cafe and wants to cover her prospective employees as well as herself.

The law's repeal could spur her to put her plans on hold. “If Obamacare gets repealed, I’m anxious. What do I do?” she said. “Right now, there is just so much instability. I don’t know how that will shift the market and what that will mean for health insurance costs in terms of small businesses ... This could be the thing that deters us from moving forward.”

Republicans have argued that Obamacare, in fact, may discourage people from entering the workforce because insurance subsidies decrease as incomes rise. “We don't want federal tax law or tax credits to ever encourage a person not to advance, not to get a raise, not to take a job,” House Speaker Paul Ryan said last week.

But the Republicans’ tax credits for insurance could have a similar effect, making households lose subsidies as income rises until they phase out at $75,000 for individuals and $150,000 for families.

Sam Altman, who runs the Silicon Valley startup incubator Y Combinator, credits the ACA with helping a lot of founders start their companies.

“The Affordable Care Act is far from perfect — for one thing, I think health insurance should be entirely separate from employment — but I hate the thought of losing it without a replacement for people who will lose insurance,” he wrote in a blog post, in which he shared the stories of startup founders who used Obamacare to get health insurance while taking the inherently risky step of starting their companies.

It's tough to determine whether Obamacare directly contributed to an individual’s decision to start their own business or leave a full-time job to become an entrepreneur. What is clear is that the self-employed have taken advantage of the new ACA marketplaces.

Figures released this year by the U.S. Treasury Department shortly before President Donald Trump took office showed one in five people who enrolled in the Obamacare marketplaces in 2014 were small business owners or self-employed, or both. These enrollees were nearly three times as likely to purchase ACA coverage as other workers.

There are between 54 million and 68 million independent workers in the labor force, defined as any individual “who can move between jobs fluidly and who has multiple employers or clients over the course of the year,” in a McKinsey Global Institute study published last fall. The software company Intuit predicts that will be part of the “contingent workforce” by 2020.

Those working for online on-demand companies like TaskRabbit, AirBnB and ride-sharing services get the most attention, but make up a relatively small percentage of the independent, non-employee workforce.

The cohort grows bigger when other types of independent workers are factored in — the budding entrepreneurs, sole proprietors, dog walkers and graphic designers and writers who freelance for many companies. Some work part-time as employees, but also earn a significant share of their income from independent work.

Such arrangements leave the individuals shut out of employer-sponsored health insurance because they aren't full-time workers. Instead they typically obtain coverage through the Obamacare health exchanges, a spouse's health plan, privately purchased insurance or government payers including Medicaid. Workers younger than 26 can now remain on their parents’ policy under the ACA.

“The Affordable Care Act was a very important step in making health care available for people who do not have coverage through a job. The ability to get health coverage has always been a barrier in the U.S. to entrepreneurship,” said Ken Jacobs, who runs the University of California, Berkeley Labor Center for Research and Education.

Gauging the size of the independent workforce is tough, because there’s no one, clear definition of who makes up that population. UC Berkeley labor researchers are working on a study to get a handle on the size of the independent workforce — those who don’t receive W-2 forms from an employer and, instead, file 1099 tax forms.

What’s clear is that this segment of the workforce is growing.

A JPMorgan Chase Institute study last year found a 47-fold increase in the number of people nationwide earning income in the gig economy between 2012 and 2015. San Francisco, where many of these large on-demand companies are based, has the largest percentage of workers earning income from these on-line platforms — at 5.1 percent, according to the study.

Many of these workers have moved from their parents' plans into a market where there are no coverage caps and applicants can’t be rejected for pre-existing conditions. While they may be struggling with rising rates, they don’t recall the sky-high premium spikes that fueled the Obamacare debate in 2009. And despite Obamacare’s flaws, they’re worried their post-ACA options could be worse.

“A lot of these people came of age during the ACA,” said Andy Slavitt, former acting administrator of the Centers for Medicare and Medicaid Services. “The very idea they can’t do these things and get health insurance is just starting to dawn on them.”

Micah Weinberg, president of the Bay Area Council Economic Institute, called repealing Obamacare without an adequate program to replace it “an economic disaster waiting to happen.”

“Entrepreneurs aren’t just people working in VC-backed startups. There are lots of entrepreneurs across the region, state and nation making, at least in the initial phases, only a few thousand dollars,” Weinberg said.

In San Francisco, a 40-year-old making $30,000 a year receiving $3,800 a year in subsidies under the ACA would get $3,000 in assistance in 2020 under the Republican plan, according to an analysis by the Kaiser Family Foundation. In Santa Cruz County, the drop is even more steep — from $5,490 to $3,000, for a 45 percent decline. In Alameda County, which includes Oakland, the 40-year-old would see a 11 percent reduction under the House proposal compared to the current law.

Graham Gardner, 33, was able to quit his job last year to work full time building the company he founded a year earlier, Civil Labs, an Oakland enterprise that allows young people to experience entrepreneurship through real and simulated activities.

Gardner bought insurance with the help of subsidies through the state’s exchange, Covered California. But he was surprised to discover his income had dropped so low at times he qualified for Medi-Cal, the state’s Medicaid program.

Changes to the health law that would replace subsidies with less generous tax credits strikes him as inherently anti-business — and an irony considering President Donald Trump's pro-business stance. “Any barrier to allowing someone to pursue their dream seems like a barrier to greater innovation and business activity in our communities,” Gardner said.

Gig workers could be even more at risk.

Dana Bigelow left his San Francisco tech job after his mother got sick to care for her full time. He makes money as a “dasher” — working as a driver for the food delivery service DoorDash.

“While the flexibility and variety is great, I needed to purchase health insurance and the Affordable Care Act helped me do that,” Bigelow said in an archived posting on the Health and Human Service Department's web site, which was removed after Trump took office.

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Still, health care may not be a dealbreaker that ACA backers would like people to think it is. The lack of data on this population makes it difficult to determine how many independent workers have health coverage, and how they get it.

Harry Campbell, a part-time Lyft and Uber driver who runs TheRideShareGuy.com, a blog and podcast for on-demand drivers, conducted a survey this year of about 1,150 drivers and found that health coverage wasn’t among the drivers’ top concerns.

More than a quarter of drivers — 26.5 percent — said they got health insurance through another job, which supports the theory that many people drive on the side to supplement their income. The second-highest percentage at 16.4 percent said they were covered through a spouse while 15 percent were on Medicare. Just over 10 percent said they bought coverage through the Obamacare exchanges, and 12.7 percent were uninsured.

“The thing a lot of drivers value about working for Uber is that flexibility, and it’s that flexibility that allows them to be doing other entrepreneurial activities,” said Campbell, 30, of Los Angeles. “In L.A., there are a lot of actors. It’s a cliche, but it’s true.”

But health insurance still was a key concern for Campbell. Having access to coverage allowed him leave his job three years ago as an engineer for Boeing to drive and manage his ride-sharing blog full time.

“The one thing I was pretty worried about — it wasn’t a necessarily a deal breaker, but was one of the top concerns — was health insurance,” Campbell said. He and his wife are insured through a policy they bought on the Covered California exchange.