Austin Tech Industry Worries Obamacare Repeal Could Stymie Innovation

Feb 17, 2017

The federal health insurance marketplace has been a big help to startups in Austin in the past few years. It's giving tech workers the ability to buy health insurance when their fledgling employers are too small to provide benefits.

But as Republicans look to repeal the law in the next few months, tech industry folks in Austin are worried the end of the marketplace could slow innovation.

Mason Hale started a small tech company in Austin about six years ago called SwimTopia. It’s a website that helps people manage competitive swim teams.

“Most people aren’t aware of how complicated it is," he says, "but most teams are over 100 kids, and keeping track week by week of who is going to be at the meet, who is not, what events they are going to swim” is tricky.

Hale’s startup helps keep track of all this for teams in about 40 states, but it’s still a small company.

SwimTopia has six employees right now – a mix of full-time and part-time. And like other startups, getting off the ground has been a slog. He says it’s a lot of work and a lot of risk.

“And that is terrifying enough without having to worry about health care,” he says.

Hale says the health insurance landscape is one big thing that has changed since he started Swimtopia, though. Before Obamacare, he didn't have enough employees to get a good insurance rate.

Because of the law, however, a health insurance exchange was created. It has been running in Texas for about four years now. Through it, insurance companies sell plans directly to consumers at an affordable rate.

It gave people like Hale the ability to buy insurance while building a business.

“It really gets down to this idea of personal freedom,” Hale says. “Like having the freedom to go start something new – to go take a risk, really to kind of pursue that American dream. ... A lot of people are chained to their job because they have to have health care – or at least they were – and I am concerned about the idea of going back to the way it was.”

Republicans in Congress say they plan on repealing Obamacare. They’ve also said they might replace it with something else, but they haven’t said what that will be.

In the meantime, folks like Hale are afraid this could stymie innovation in places like Austin, which hosted a lot of startups during the Obama years.

The main reason is that Obamacare made it easier for startup founders to recruit people. 

Andrew Eiche, a video game developer in Austin, now works for a virtual reality startup. He says he previously worked for big companies, including Booz Allen Hamilton, a big tech consulting firm. But after Obamacare rolled out, he says, he considered working at a smaller startup.

“That’s probably the biggest factors that gave me the confidence to leave the safety net of Booz Allen Hamilton and go into the startup world,” he says.

Eiche says a lot of talent has flowed through Austin since the marketplace started. He says being able to bring the right people in early on makes those startups more successful in the long run.

“Startups aren’t just their founders,” Eiche says. “They are founders and like the first five or 10 people that are willing to quit their job and follow the founder.”