On Thursday, the Supreme Court voted to uphold a key provision of the Affordable Care Act, finding that the federal government can lawfully provide health care subsidies to poor- and middle-class residents in every state. This, of course, was a major victory for Obama; the ACA will likely become the linchpin of his presidential legacy. But it is perhaps an even bigger win for the so-called gig economy, with the armies of freelancers it relies upon to function.
The preservation of the Affordable Care Act is crucial to gig economy companies like Uber. By making it easier and more affordable for an individual to buy health insurance on their own, the Affordable Care Act might make people more inclined to ditch that full-time job with great benefits. And, just maybe, they’ll quit to go work for Uber.
The ruling was second time the health care act stood up to a challenge in the Supreme Court, a sweeping endorsement that ensures with near certainty that it will long outlive the Obama administration’s time in the Oval Office.
"The democratization of those types of benefits allow people to have more flexible ways to make a living,” Uber CEO Travis Kalanick reportedly told a dinner party last October, momentarily breaking from his usual techno-libertarian slant to issue a partial endorsement of Obamacare.
For Uber, Kalanick said, the impact of Obama’s health care policy on business has been “huge.”
Uber’s drivers, he said, “don’t have to be working for The Man.”
This Supreme Court affirmation for the ACA, said Michael Munger, an economist at Duke University, is the first step in what he expects will eventually be a dismantling of our entire labor economy.
“Universal coverage, not tied to job status, is a huge boost to the gig economy,” said Munger by email. “To the extent that Obamacare is a step in that direction, the decision by the Supreme Court is a boost for job flexibility and positive change.”
Not to mention a pretty big boost for Uber.
Right now Uber and other on-demand start-ups are fiercely fighting off lawsuits and regulators that want the companies to reclassify their workers as employees, precisely so they can reap the same benefits that full-time employees are currently entitled to. Uber saves a lot of money not offering those benefits to drivers — health insurance alone would cost the company several thousand dollars each year for every driver.
But if it becomes more common for people to buy their own health insurance, there will be less of an incentive for an Uber driver to seek out employment status. As of now, more than half of all insured Americans still receive health insurance coverage from an employer (though that number has declined precipitously in recent years). And that coverage can trap them. A 2008 Harvard study found that more than 11 million people wanted to leave their jobs, but didn’t primarily because they wanted to keep their health insurance. In other words, in our depressing reality, health benefits often trump job satisfaction.
As Felix Salmon has pointed out, Americans relying on their employers for health insurance isn’t rooted in any kind of logic. It was a clever way employers devised to get around wage controls of WWII, a raise they could offer to employees without actually raising their wages.
“There is a huge disadvantage in the American system, compared to other countries,” said Munger. This system, said Munger, is a loss for employees, employers and even consumers. It winds up costing more to hire employees and more to produce goods; and employees stay in jobs they loathe just to keep their health benefits.
But even if the Supreme Court ACA ruling paves the way for people to get affordable health insurance that's independent of their employer, what about other benefits like retirement, sick pay and worker's compensation?
Munger is among a camp of academics and Silicon Valley types calling for a system that decouples benefits from employment status entirely.
“The right answer is a third class of worker," Simon Rothman, a partner at Greylock and an investor in meal delivery startup Sprig, told Business Insider this month. "People are now becoming one-person companies, and they're not even working for one entity."
Well, until we create that "third class," this is a nice stopgap measure for gig economy workers. By a 6-3 vote, the court decided that the government should be able to offer subsidies not only in states that have their own health insurance exchanges, but those where exchanges are run by the federal government.
The Supreme Court ruling means then that at least one traditional employee benefit—health care—will be one that Uber drivers and TaskRabbits can more easily get on their own.