The uncertain future of Obamacare’s small business exchanges

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We got some news this week that Obamacare's new insurance marketplaces for small businesses, set back by early delays, are mostly headed on the right track. Though small businesses have been able to sign up on the so-called SHOP exchanges since October, the federal enrollment Web site for them is finally expected to launch in November.

The SHOP exchanges were meant to provide small businesses an easy way to compare health plans and provide greater choices to their employees. A key question remains, though — will small businesses actually show up to the SHOP exchanges?

The Department of Health and Human Services hasn't yet reported any enrollment statistics for the small business marketplaces it operates in nearly three dozen states. Though, SHOP enrollment in the states that have reported this information has been pretty low so far.

Take the example of California, which signed up 1.4 million people in private individual health plans this past enrollment period. Despite its success in the individual exchange, only about 6,000 people signed up in the small business SHOP exchange as of last month.

Affordable Care Act supporters have offered several explanations for the SHOPs' slow start. First, the Obama administration and states put an early focus on the individual exchanges. Second, many small businesses owners decided to renew their coverage early last year. And, finally, the federal Web site issues and the delay of a program allowing employers to provide their workers with more insurance options in the SHOP exchanges.

It's also worth nothing that the insurance market for individuals not covered by their employers was pretty broken before Obamacare took effect — so the individual exchanges, which also offered much more generous subsidies than the SHOP exchanges, filled a greater immediate need. Small businesses generally had more options for providing coverage for their employees, and that includes the recent growth of privately run exchanges. That's all to say that if the SHOP exchanges will ultimately be successful, small businesses will have to see the SHOPs providing some value.

One key feature of the SHOP exchanges may still be delayed for another year. The federal government will allow states with federal-run SHOPs to request by Monday a further one-year delay of the "employee choice" program, which is seen as one of SHOP's biggest advantages. It essentially allows small employers to give their workers a defined payment to choose their own health plan among options available in the SHOP marketplace. Employee choice is already mostly available in the District of Columbia and the 16 states running their own small business exchanges.

John Arensmeyer, chief executive of the Small Business Majority, thinks it will take a few years to build up the small business exchanges. He's particularly worried that the Obama administration's decision to allow a two-year extension of health plans that don't comply with the new Obamacare requirements will reduce the pool of potential SHOP customers.

"I guess the first thing is we've got to get all these features implemented," said Arensmeyer, whose group supports the ACA. "We have to no longer allow people to sign up for non-compliant plans before the SHOPs really have a chance."

Micah Weinberg of the Bay Area Council, a California business advocacy group that supports the ACA, offers two recommendations for making the SHOP exchanges more attractive. He said the states and federal government should allow greater flexibility in how health plan benefits can be designed, and he thinks there should be better integration between the individual and small business exchanges since employers could consider both options for their employees.

"The goal of SHOP must be the goal of health reform generally: to get the greatest number of people into the highest quality, most affordable coverage and to be agnostic about where they get this coverage," he said.

Top health policy reads from around the Web:

Democrats and Republicans have different Obamacare experiences. "Thirty-four percent of Republicans say they personally know someone who lost health-insurance coverage, lost their job or had their hours cut because of the Affordable Care Act, according to a poll released today by the Kaiser Family Foundation. ... [Forty-six] percent of Democrats say they know someone who was able to get health insurance because of the Affordable Care Act. Only 19 percent of Republicans could say the same." Jaime Fuller in the Washington Post.

Peering over Obamacare's subsidy cliff. "Once the Smiths or the Johnsons score an extra construction job or boat charter that pushes their earnings over 400% of the poverty line, they get nothing. One way to have chiseled the subsidy cliff into a gentler slope would have been to keep some set of gradually declining premium subsidies for those earning over 400%. ... Another way to chip at the cliff would have been to lower premium-subsidy percentages still more, beginning at the 300%-above-poverty level and gradually decreasing the subsidy to zero when 400% above poverty was reached." Steven Brill in Time.

People want hospitals to get with the times. "More than three quarters of the American public expects hospitals to use electronic medical records, according to Morning Consult polling. But not nearly as many are convinced that health IT is secure, with only 53 percent saying they trust the safety of the electronic records. People without insurance or a college degree were the least likely groups to expect a health provider to use an electronic medical record or trust that they were safe." Michael Ramlet in the Morning Consult.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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