California takes down online health insurance exchange for small businesses


If you’re a small-business owner in California, the online SHOP Marketplace is no longer open for business. (Jon Elswick/AP/File)

The nation’s most populous state has elected to temporarily shutter its new online health insurance marketplace for small business only four months after it launched, dealing yet another blow to a key element of the health care law meant to lower costs for employers.

California officials on Wednesday announced they are suspending online enrollment effective immediately for small businesses on the state’s new health insurance portal, known as Covered California. Health plans available through the state’s Small Business Health Options Program (or SHOP) will still be available but can only be purchased over the phone, via paper applications or through insurance agents.

State health officials say they will use the time to “implement a series of redesigns.”

“The SHOP portal was not meeting the needs of agents or small employers and needed improvements,” Covered California Executive Director Peter V. Lee said in a statement announcing the decision. “Taking the portal offline will not affect the paper application process, which has been the preferred enrollment method traditionally used by insurance agents in the small-group market.”

Lee later added that he believes the “new version of the online portal will significantly enhance the enrollment process” for small-business owners.

Related: White House delays coverage rules for some businesses

So far, nearly 600 small businesses have enrolled in plans through Covered California, representing nearly 4,500 individuals, and another 200 group applications are currently being processed. Officials said the employer exchange is expected to come back online this fall, putting California’s small employers in the same position as those in states that elected not to build their own health insurance marketplaces.

Originally, small-business owners in every state were supposed to be able to purchase plans online starting in October; however, the administration repeatedly pushed back the expected launch date for the online marketplace operated by the federal government, which will be used by employers in the 33 states that did not build their own sites. The federal small-business exchange is now slated to be fully functional in November.

Still, California is not the only state running its own exchange that has run into serious problems with the small-business side of the marketplace. Several states have reported technical problems with their SHOP portals, and in Maryland, officials have yet to even launch an online small-business exchange.

The portals were meant to curb rising health care costs for small businesses by increasing competition among insurers. The White House has said they are intended to allow employers to purchase insurance with the same ease as buying a flight on Web sites like Expedia or Priceline — but in most states, it has not panned out that way yet.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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