PPACA spawned dozens of startups

(Bloomberg) — More than 90 new health-care companies employing as many as 6,200 people have been created in the U.S. since the Patient Protection and Affordable Care Act (PPACA) became law, a level of entrepreneurial activity that participants say may be unprecedented for the industry.

Zenefits, which provides human-resources software and acts as a health-insurance broker for small employers, wouldn’t exist without the law, said Parker Conrad, the firm’s chief executive officer. Since PPACA’s inception in April 2013, the San Francisco-based company has grown to more than 900 employees. That makes it the largest firm among dozens that have sprouted in the law’s wake, according to PricewaterhouseCoopers, which issued a report on the trend this week.

The health law, which took full effect in 2014, represents the most dramatic change to the U.S. health system in 50 years. Entrepreneurs, including some from within President Barack Obama’s administration, have founded companies that target employers, health insurers, hospitals, doctors and consumers looking to navigate new requirements and possibilities.

“There’s a lot of opportunity for new market entrants,” Zenefits’ Conrad said. “The ground is literally shifting under the feet of the incumbents.”

Conrad, a cancer survivor, said that after reading PPACA cover-to-cover and talking to insurance experts, he realized it offered an opportunity to ease the process of pricing, selling and managing health insurance for small businesses. Zenefits, which has 10,000 clients, can “spit out pricing” for every health insurance plan in a state “in milliseconds,” using only the ages and addresses of employees, he said.

Law’s opponents

Opponents of PPACA have continually warned of the law’s potential effect on U.S. jobs, with Republican John Boehner of Ohio, the House Speaker, frequently calling it “the president’s job-killing health-care law.” The American Action Forum, a nonprofit advocacy group that opposes the law, has blamed it for reducing pay at businesses with 20 to 99 employees by about $22.6 billion annually.

Still, the act became law just as the nation’s employment figures began to improve. On March 6, the Bureau of Labor Statistics reported that the U.S. added 295,000 jobs in February and the unemployment rate fell to 5.5 percent, the lowest level in about seven years. The economy has added at least 200,000 jobs for 12 straight months, the best run since a 19-month stretch that ended in March 1995.

“The claim that the Affordable Care Act is a job-killer is just factually untrue,” said Bob Kocher, a doctor and former Obama adviser who is now a partner at New York-based venture capital firm Venrock Associates.

‘Enormous opportunity’

The law has “created the most enormous opportunity to build health-care companies ever,” Kocher said.

His firm has invested in eight such startups, including a Bethesda, Maryland-based company started last year by another former Obama administration official, Farzad Mostashari. His company, Aledade assists doctors looking to take advantage of a program in the health-care law that offers higher payments under Medicare, the insurance plan for the elderly and disabled, if they can reduce the cost of caring for those patients without harming their health.

Mostashari didn’t return a phone message left at his office.