Health-care setbacks could hit region’s small businesses


Delays implementing the health care reform law could undermine its potential to drive down coverage prices for small businesses. (RON EDMONDS/ASSOCIATED PRESS)

Some state and federal officials are falling behind setting up new health-insurance exchanges for small businesses, which could leave employers in the region waiting longer than expected for the competitive pricing they were promised under the health-care law.

The Government Accountability Office has warned that federal and state officials still have a long way to go in “a relatively short amount of time” to set up the new online marketplaces, called exchanges, where small-business owners will be able to shop for health plans from various insurance providers.

The health-care law required states to set up the exchanges by October, giving the Department of Health and Human Services and Centers for Medicare and Medicaid Services the same time frame to establish a marketplace for firms in states that chose to leave the chore to the federal government.

Now, three months away, it appears those deadlines could be missed.

“Whether [the government’s] contingency planning will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined,” the GAO concluded in dual reports last month, adding that “many activities remain to be completed and some were behind schedule.”

In the 17 states setting up their own exchanges, the report noted that nearly half of the key activities the government had intended to complete by the end of March had fallen behind. A program designed to educate employers and employees about the exchanges and how to enroll, for instance, is roughly two months behind schedule, according to the GAO.

Meanwhile, most states still must review plans proposed by insurers and train government workers to help business owners shop for coverage.

In Maryland, those and other technology-related challenges have prompted the state to push back enrollment three months to January 2014, when coverage sold on the exchanges was supposed to take effect. Instead, coverage under those plans will start in March.

Joshua M. Sharfstein, chairman of the Maryland Health Benefit Exchange board, said the decision to delay enrollment was a strategic one, noting that officials have been working with health-industry leaders to make the transition as smooth as possible for insurers, brokers and business owners. So far, 13 insurance providers plan to sell on the exchange.

“We are focusing on optimizing our partnerships with people who have a lot of experience selling plans to small businesses, and we felt the extra time would be well spent,” he said.

Still, the delay could drive down the number of firms that use the system next year, as employers whose current plans expire at the start of the year will have to renew or find a new plan before Maryland’s exchange is up and running.

Moreover, it appears even the new deadlines are not set in stone. Sharfstein said he expects the exchange to open for enrollment in January but stopped short of saying he was certain the department would meet that target.

“We do expect there to be bumps in the road,” Sharfstein said in an interview.

Virginia elected not to set up its own exchange, defaulting to the federal government’s small-business marketplace. Originally, the federal exchange was supposed to allow business owners to select various plans for different workers, which was intended to drive down rates by creating more competition. Citing operational challenges, though, the administration postponed that feature until 2015, requiring employers to purchase a single plan for their companies.

“Entrepreneurs will continue to experience the premium increases they have come to expect” so long as the exchanges do not include all the intended options, Rep. Sam Graves (R-Mo.), chairman of the House Small Business Committee, wrote in a letter to federal officials.

So far, the region’s only delay-free zone is the District, where a city-run small-business exchange is moving forward as planned. D.C. Health Benefits Exchange Authority Executive Director Mila Kofman confirmed that the exchange will “definitely” open for enrollment in October.

Her team will this month begin training insurance carriers to sell plans on the exchanges, and by August, they will start loading approved coverage offerings onto the Web site. Four insurers have submitted plans for the exchange, called DC Health Link: Aetna, Kaiser Permanente, United Healthcare and CareFirst BlueCross BlueShield.

“All of the critical standards and options will be ready on day one,” Kofman said, noting that the exchange will offer the multi-plan feature that has been delayed on the federal marketplace (Maryland is planning to offer that option when its marketplace opens, too).

“We’re working full force,” Kofman said. “People are working night and day to get ready.”

Some operational details are still in flux. The D.C. Council last month approved legislation to require all insurers selling plans to small businesses to do so on the city’s new Web site. The mandate would make the city one of few places that would preclude employers from purchasing plans outside the exchanges.

A group of more than 150 small-business owners and associations have sent a letter to the city exchange in protest, reminding officials that the president promised that “if you like your health plan . . . you will be able to keep your health-care plan” when the law was moving through Congress.

They expressed concerns that the new exchanges would provide “standardized, cookie-cutter coverage” at even higher rates than they pay now.

Kofman argued the opposite. Requiring all insurers to display their plans in one place will drive up competition and drive down prices, she said — and it is already happening.

When the board posted preliminary offerings from all four insurers last month, United’s prices were markedly higher than those of its competitors, she said. The company last week updated its plans, with rates that had dropped about 10 percent.

“Price transparency leads to real competition for small businesses’ business,” she said.

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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