Health-care law’s small-business marketplace not attracting many small businesses


More than 5,000 people have signed up for insurance through the new individual exchange in the District, compared to less than 300 people who have signed up through small businesses on the city’s employer exchange. (screen shot dc health link)

After a slow start, the pace of enrollment is starting to pick up on the health-care law’s new insurance marketplace for individuals and families, with more than 1 million people signing up for coverage last month, including strong showings in Maryland, Virginia and the District of Columbia.

It’s a very different story, though, for people trying to enroll through the insurance exchanges designed for small employers.

Small-business owners, who were supposed to gain more choices and cheaper rates from the new online-health-insurance portals, have been slow to select plans through marketplaces since the rollout started last fall. In part, some say, that is because luring employers to the marketplaces has taken a back seat to fixing technical problems and recruiting individuals and families.

As a result, businesses in many states have been left with an online-shopping portal that is only partially functional — if they have one at all.

Originally, the small-business exchanges were meant to offer an online-shopping platform where employers could sort through plans from insurers and offer one or several options to their employees. Employees would then select from the options their employer had chosen, and their rates would reflect any employer contribution. That’s a different process than the one used by the exchanges for individuals, where people can select a single plan to cover themselves and, in some cases, their families.

In the District, health officials launched both the individual and employer marketplaces on schedule in October, and after correcting a number of early problems with the site, enrollment on the individual exchange has started to pick up. More than 5,000 people have signed up for private insurance plans through the individual portal.

At the same time, fewer than 300 individuals have purchased a plan offered by their small business on the city’s new exchange, even though nearly 10,000 employers have created an online profile allowing them to shop for coverage.

“We have been very focused on the individual side, more so than on the small-group side,” Mila Kofman, executive director for the city’s health-insurance exchange, called DC Health Link, said in an interview. Her office did not have data available on how many companies were represented by the workers who have enrolled.

Deadlines may also play a role. Kofman noted that individuals have a limited window that closes at the end of March, during which to purchase coverage for the coming year, and those who fail to secure a health plan may be subject to a tax penalty under Affordable Care Act rules.

Conversely, employers can apply for coverage through the small-business exchange at any point during the year, and those that are eligible to shop for coverage (firms with fewer than 50 full-time workers) are by definition exempt from rules that will soon penalize companies that do not offer plans to their workers.

“I expect our small-business numbers to pick up significantly once we shift our internal focus from the individual exchange to the small-business exchange,” Kofman said. “It’s all about resources and deadlines.”

In Maryland, small-business enrollment has not started. State officials have pushed back the launch of an online insurance portal for small firms three times, first to January, then to April, then to November. Meanwhile, 30,000 people have signed up for private insurance plans on the individual exchange, about half of them in the past six weeks.

“Our priority has been to improve the user experience on the individual exchange,” Joshua Sharfstein, chairman of the Maryland Health Benefit Exchange, said in an interview.

Sharfstein said the state intends to allow employers to start enrolling in plans in April, but for the first six months they will have to purchase plans directly through insurers or brokers using paper applications — not quite the one-stop online shopping experience President Obama promised Marylanders during a speech last year at Prince George’s Community College.

Maryland is not the only state still struggling with its small-business marketplace.

Oregon has not yet launched an employer exchange, either, and Minnesota’s small-business site has reportedly been riddled with glitches. During the first few months in Kentucky, which has been lauded as a success in terms of overall enrollment, only 14 companies signed up on the small-business marketplace.

And in California, officials earlier this month pulled down the state’s small-business exchange Web site, admitting that it “was not meeting the needs of agents or small employers and needed improvements.”

Online enrollment on the federal exchange — which is available in states, including Virginia, where governors declined to set up their own exchanges — has been repeatedly delayed, too, most recently until November. Until then, employers in those 34 states will be in the same boat as small firms in Maryland, with access to new insurance plans only through brokers or insurance companies, and only by way of paper applications.

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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