Small Business Insurance Exchange First Year Results

Small Business Insurance Exchange First Year Results-Where Does Your State Stand?                                  

Now that first year data for enrollment in Small Business Insurance Exchanges is available, The Commonwealth Fund, a nonprofit health systems research group, sponsored a webinar  for SHOP results.[1] This article reviews nine states which chose to participate in the Small Business Insurance Exchange program, reveals information on enrollment and some surprising innovations for these quasi-governmental insurance marketplaces which was gleaned from that presentation as well as other sources including state legislative sites.

Statewide Performance

Several states created incentives or mandates for the local insurance industry to participate in the SHOP exchanges. The difference in approach between Maryland and Washington is stark, one set a clear standard and mandated participation, sort of “you will suffer together equitably approach” versus Washington’s “who wants to play approach. Colorado, New York, and Oregon decided to implement waiting periods for insurers who chose not to participate in the small business exchange program initially.[2] This does not appear to be much of a disincentive, because the cost to establish the programs, would be borne by the insurers, and create a competing component for their existing insurance programs.Waiting to participate may be viewed as prudence,  but with the risk for market share loss.

California

California’s Small Business Health Options program has been plagued by enrollment glitches, but it is expected to succeed over time. When I navigated to their site from the healthcare.gov site, it suggested that employers had to mail their completed application materials.

Colorado

Colorado’s health insurance exchange web site, called Connect for Health Colorado clearly indicates the employer category, which the end user can follow to locate plan information and insurance broker or government assistance.

District of Columbia

The District of Columbia was able to get its Small Business Exchange open in a mere nine months and it includes; Aetna, Carefirst (a Blue Cross/Blue Shield plan), Kaiser, and United Health Care. According to the D.C. Health Exchange Director, only one group with fifty employees enrolled in their SHOP, but they found robust participation from the small businesses it was meant to serve. Of program enrollees 83% had fewer than five employees and 50% of those enrollees chose the platinum or most comprehensive health care plan, and 28% chose the gold plan. It appears that adequate health care coverage is of more concern to these business owners than the lowest price plan.

Florida

Florida has been successful with its Small Business Health Options Program and its web portal was clear and easy to follow.

Maryland

Originally Maryland mandated that insurance companies with state revenues in excess of 20 million of insurance premiums participate in the small business exchange.[3] Maryland further incentivized private insurance companies to participate in its SHOP CO-OP program by exempting them from paying premium tax on small business health insurance plans within the SHOP program. As of May 2014, Maryland has decided to abandon plans to run its own Small Business Exchange, because of the high cost, instead opting to rely on the insurance broker community to market it. This means that qualifying employers will still be able to obtain government tax credits for purchasing insurance, which have been available since 2010, but only through the federal exchange starting this year.

New York

In New York State, most major insurance carriers were interested in participating in the small business exchange.  But New York has a robust marketplace with many carriers and several of their Medicaid carriers were interested in entering the SHOP marketplace. This would seem to be a prudent move, allowing diversification of risk, a stabilizing factor for managing a population.

Oregon

Oregon, which is now infamous for accepting over 130 million dollars in federal money to set up an exchange, including 48 million for “early innovation”, and ultimately was unable to enroll a single individual it it’s web portal.[4] For more information on federal money given to states for the insurance exchanges go to Chapter 13, of Unraveling U.S. Healthcare-A Personal Guide, published in July 2013, by Rowman and Littlefield.  Oregon found, like Washington, that only a single insurance company wanted to participate in the SHOP program. As of March 17, 2014, Oregon has been unable to enroll a single individual on its small business exchange program.[5]  To further entice small business to enroll in the small business exchange program Oregon has reduced premiums by 13.1%, which is a significant regression.

Rhode Island

Rhode Island has successfully launched its Small Business Exchange program, with a greater percent of small business participation than any other state. Rhode Island’s web site for SHOP is integrated into the general health exchange web site which I was able to navigate through easily. Way to go Rhode Island!

Washington

Washington State chose not to participate in the small business exchange in the inaugural year, primarily because only one insurer indicated an interest in bothering with the exchange process.

Federal Marketplace Information

The Center for Medicare and Medicaid (CMS) has also stipulated that insurers with a 20% or greater share of the individual exchange market must offer the small business exchange as well.  The deadline for small business exchanges has been moved to 2015. CMS has created a tool for employers to use to calculate full time employee equivalents, in order to determine eligibility for SHOP exchanges, in addition to the tax credit estimator. Follow the links to see for yourself.

 https://www.healthcare.gov/fte-calculator/

https://www.healthcare.gov/small-business-tax-credit-calculator/

 Employers are slated to receive a bundled monthly billing even if employees have five different provider and plan choices, by 2015.  The federal small business insurance market place will include an agent/broker portal, so businesses can designate a representative and that party will receive some stipend. In order for a small business to receive the federal tax credits for health insurance purchasing, the plan must be part of the Small Business Health Exchange Option, which mandates standards for coverage and plan administration protocols.

 It is unclear how insurance agents will be paid for federal insurance exchange enrollments, but since CMS does pay Medicare enrolled agents to market Medicare products, and CMS is the governing agency for the program, this should be manageable. The big difference is Medicare plans have a single 3 month open enrollment window each year, whereas the SHOP plans have a rolling calendar of enrollments depending on the date of inception.

For more information on small business exchanges, an excellent nonpartisan summary is found at the National Center for State Legislation,[6] which was one of my sources for Unraveling U.S. Healthcare-A Personal Guide’s chapter on the Patient Protection and Affordable Care Act.

And this is the healthpolicymaven signing off, encouraging you to explore your options for health care subsidies from your government. Your government is helping you to pay for your insurance, through direct insurance subsidies or indirectly through tax free benefits for individuals and tax deductible benefit plans for employers.

http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

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[1] http://www.commonwealthfund.org/about-us/events/2012/small-business-exchanges

[2] http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/rwjf406939

[3] http://marylandhbe.com/wp-content/uploads/2012/10/Maryland_Health_Benefit_Exchange_Act_of_2012_Senate_Bill_238_House_Bill_443.pdf

[4] http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

[5] http://stateofreform.com/news/industry/insurance-plans/2014/03/oregons-health-co-op-targets-small-group-market-lowers-rates-13/

[6] http://www.ncsl.org/research/health/small-business-health-insurance.aspx