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Creative Destruction

Obamacare versus artists, writers, musicians, actors, et al.

Sep 9, 2013, Vol. 19, No. 01 • By BEN SCHACHTER
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Nancy Pelosi waxed rhapsodic in 2010 as she imagined the benefits of Obamacare: “Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance.”

Gary Locke

Gary Locke

Well, that was the economy we used to have. But as Obamacare begins to kick in, artists, photographers, writers, and other members of the “creative class” who have access to health insurance programs through numerous professional organizations will lose that coverage.

Up until now professional organizations have worked with insurance providers to craft reduced-rate plans for their members. But thanks to the fine print in the Patient Protection and Affordable Care Act (PPACA), on January 1, 2014, many of these plans will fail to pass legal muster.

The College Art Association website posted a notice this month: “The New York Life Insurance Company recently informed CAA that it will no longer offer catastrophic healthcare coverage previously available to CAA members.” Why? Because it “is no longer an option” for “associations whose members reside in different states” to provide such coverage. These members will have to seek help from their home states’ newly formed Obamacare exchanges. Plans offered to Modern Language Association (MLA) members will suffer a similar fate.

Other insurance providers are reporting cancellations. The Entertainment Industry Group Insurance Trust (TEIGIT) website posts the following notice: “All individual and/or Sole Proprietor Health Insurance will terminate January 1, 2014. This includes plans acquired as Members of our Affiliated Associations & their groups.” Those affiliated associations include the American Federation of Television and Radio Artists, the Dramatists Guild, the Graphic Arts Guild, NY Women in Film and Television, and many others.

David Rubin, plan administrator, explains the effect of the Obamacare rules: “In TEIGIT’s case this insurance is limited to sole proprietors (i.e., self-employed) who are members of affiliated guilds/associations/unions, and are working at least 20 hours a week (averaged out because performers often work intensely and then have slow periods) in the fields of art and entertainment.”

Twenty hours? This will affect huge numbers of freelance artists, musicians, disc jockeys, and so forth. This is not a matter of penalties, mandates, or a business’s ability to absorb the cost, but rather a change in definition. Freelancers are losing their collective purchasing power because they are now considered “individuals.”

But don’t worry, everyone will be covered, right? As the College Art Association notes in a “Brief message” to its members on its website, “Here’s the good news: PPACA includes comprehensive reform that is designed to provide affordable health coverage for all individuals. The average premium for individuals who purchase coverage directly today (i.e., they do not receive coverage through their employer) is expected to decline significantly.”

But the membership of these organizations should worry. Unless they are older or suffer from some preexisting condition that made coverage hard to obtain, freelance artists, designers, and musicians forced to enter the state-run exchanges are far more likely to see their rates go up—or to face the individual mandate penalties. This will be especially true, as alert observers of Obamacare implementation have noted, for those under the age of 30.

Professional organizations should also worry. Once they can no longer offer discounts on health insurance, might prospective members have second thoughts about joining? Sure, the MLA, perhaps the largest professional association of academics with a 2012 membership of 28,563, can withstand losing a few hundred members. And the CAA attracts over 6,000 attendees to its annual conference. But smaller organizations do not have such cushions. Even as some current plans are grandfathered in under the new rules, future members might think twice about joining. After all, why should they, when one of the prime benefits of banding together with their peers has been removed? TEIGIT and similar insurers will almost certainly lose a lot of clients not because their customers were unhappy but because of Obamacare.

Pelosi’s vision of a world full of carefree artists, musicians, and writers is a mirage and becoming fainter the closer we get to January 1. The unfortunate freelancers out there who are losing their insurance because of Obamacare now have one more thing to worry about. They may want to start looking for a day job.

Ben Schachter is a professor of visual arts at St. Vincent College.

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