Health care law’s small-business exchange right on track — with one glaring exception


The health care law’s small business marketplace, commonly called the SHOP exchange, still won’t be fully functional by this November. (Jon Elswick/AP)

Six months have passed since the Obama administration announced that the launch of the health care law’s online insurance marketplace for small businesses would be delayed until November, more than a year after its originally scheduled start.

So, how is the work coming? Six months from now, can small employers across the country expect to finally sign on to a fully functioning health insurance exchange?

So far, the answer seems to be yes — with an asterisk.

In an extension of an earlier delay, Department of Health and Human Services officials have finalized rules giving states another year before they have to implement a key feature of the exchanges meant to help small businesses rein in their health costs.

Originally, every state was supposed to allow small employers to offer employees a choice of multiple plans on the insurance marketplaces — a feature experts say will help stir competition and down rates in the long run.

Now, “the employer choice” feature take wait longer. According to the new regulations, state insurance commissioners are permitted to opt out of adding that feature to their state’s small business exchange this coming year if they have reason to believe it will prompt insurers to raise rates for 2015.

It’s a “major letdown for small business owners and their employees,” John Arensmeyer, chief executive of Small Business Majority, a lobbying and advocacy group, said when we first reported that the delay was in the works earlier this year.

Arensmeyer isn’t alone. HHS officials note that commenters on the proposed rule complained that the “employee choice” component is “statutorily required and is a core element necessary to” attract participation by small firms. Others noted another delay means another year before employers, insurers and state officials can assess whether the exchanges are driving down rates as intended.

Other than that change, the federal small business exchange seems to be on pace for a fully operational debut in November.

A second HHS memo posted this month shows that the agency met an April deadline to conduct preliminary testing with a select number of insurance carriers. Starting in June, officials will begin working with all issuers that intend to sell small-business plans through federal exchange next year.

A month later, they will start conducting tests to ensure that the insurance marketplaces are linked up with the necessary federal data centers, according to the memo. On October 20, the department intends to “soft launch” the online small business marketplace in a select few states (the agency has not yet determined which ones).

If all goes well, the federal exchange will go live on November 15 in every state that elected not to build its own insurance marketplaces (and in a few that have given up).

However, this time last year, we were still expecting an October opening — so stay tuned.

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 runs the On Small Business blog.
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