The Murphy Family

Ever dream about getting out of the rat race and putting your talent and creativity to work helping others?  That’s just what Joe and Virginia Murphy did.  But they had to give up the security of the health care coverage that came with Joe’s job as they followed their dreams.

Joe and Virginia, along with their young son Abel, moved from New York City to Memphis in 2007 to start a music school for young children, Music for Aardvarks. Virginia started an improvisational theater group, Playback Memphis.  Both are passionate about their work and have plans to use Playback Memphis’s theater experience to help Memphis communities tackle tough issues in their schools and neighborhoods.

Building and expanding these new businesses, contributing to their community, and raising a family take most of their time and energy. They are young and pretty healthy so trying to find adequate and affordable health insurance coverage should be the least of their concerns, right?  Wrong.  Until the Affordable Care Act goes into full effect in January 2014, self-employed entrepreneurs in most states, including Tennessee, must navigate a “wild west” of inadequate and unaffordable health insurance options.

But that is all about to change when the Affordable Care Act goes into full effect on January 1, 2014. For families like the Murphys, the ACA will allow them to follow their dreams without worrying about losing employer-sponsored coverage.   In a Robert Wood Johnson Foundation report , which we co-authored with the Urban Institute, we estimate that the number of self-employed Americans will be 1.5 million higher in 2014, because of the ACA’s insurance reforms.  In particular, the ACA ensures that:

• No applicant can be turned down for health insurance because of a preexisting condition.
• Individuals cannot be charged higher premiums because of their health status.
• Insurers must offer plans with a comprehensive set of essential health benefits.
• Tax credits will help reduce premiums for low- and moderate-income individuals and families.
• Medicaid expansion, in some states, will provide coverage for those with the lowest incomes.

When the Murphys left New York in 2007, they bought COBRA continuation coverage through Joe’s union plan. It was comprehensive coverage with no deductible, but the premiums cost $600 a month because, under COBRA, Joe had to pay the full premium on his own. However, the COBRA coverage came in handy when their second son, Harlan, was born in 2008. Later that year, when they ran through their 18 months of COBRA, they sought coverage in the private individual market in Tennessee. In Tennessee, like most states, self-employed people must buy coverage through the individual market, not in the small employer market. Joe and his family were healthy when they applied for coverage and had no significant health conditions in their past, but the best plan they could get was one that had a $2,500 deductible with premiums of $398 a month and a 6 month wait for the coverage to begin.

It was never a question whether they would maintain coverage once their COBRA ran out, and in 2011 they had a year of health care bills that proved their decision right. First their son had to go to the emergency room for a severe burn, a few months later Virginia needed to have an appendectomy, and to close the year out, Joe developed a serious infection in his leg and wound up in the hospital with two rounds of a costly antibiotic. Even with health insurance, their total out of pocket spending for the year was about $8,000, including $1,500 for Joe’s antibiotics. Since that year, their health care needs have been routine – mostly just check-ups for their children. But they’re still paying off the bill from 2011, and have seen their premiums nearly double over 5 years – to about $700 a month– with a deductible of $2,500. In the last year alone, the premium jumped 17 percent. While some consumers might trade higher deductibles for lower premiums, Joe said doing so would be “taking too big a risk” for his family.

Joe and Virginia are lucky because they were healthy when they sought coverage in the individual market and were able to find a plan. But revisiting the details of their health care story is not something Joe easily or happily recounts. Ask Joe about health insurance and his family’s costs, and he’ll recall that really bad year when 3 of their 4 family members needed hospital care. Dealing with health insurance and uncovered expenses is not something he is eager to talk about.

But ask him about the work he and his wife do and the conversation picks up. The theater company has an educational mission that gives them an opportunity to combine their passions and talents with programs that benefit the community: an anti-bullying program in the schools and a project that involves presentations with police throughout Memphis. And they have plans to do more.

For people like Joe and Virginia, health insurance should be the last thing they worry about. They would much rather put their energy into their work, but they need to know they have coverage for the routine care as well as the unforeseen. Sometimes Joe has thought about whether there is a better plan out there for them, but shopping around would be time consuming and frustrating because of the bewildering array of options and no ability to make “apples to apples” comparisons of premiums, benefits, cost-sharing and other important factors.

Beginning this fall, Joe will have an opportunity to shop for coverage on Tennessee’s new Health Insurance Marketplace. If they look for new coverage, Joe and his family won’t have to worry about being denied a policy because of health conditions or facing big jumps in premiums year to year.  And they can shop with confidence that the Marketplace plans have met minimum quality standards and must limit their out-of-pocket costs. Even better for Joe, the web-based Marketplace will offer Joe a streamlined, simplified shopping experience in which he can compare and choose a plan that works best for his family. And then he can get back to his life’s work.