One week away, Obamacare’s small business insurance exchanges not all ready for launch


New health insurance exchanges for small business owners will open next week for employers in most states, including those in the District and Virginia. In Maryland and Washington, the wait continues. (Michael Nagle/Bloomberg)
September 23, 2013

New health insurance marketplaces for small businesses are scheduled to open across the country next week, and while most states are ready to begin enrollment, others have fallen behind, delaying some of the savings employers were promised under Obamacare.

District officials, for example, say all systems are go for launch for the city’s new health insurance exchange on Oct. 1, the deadline established by the Affordable Care Act for states and the federal government to open enrollment for new, online insurance marketplaces.

While the Obama administration has pushed back for a year a mandate requiring many employers to start covering their workforces, officials have moved forward on the new insurance exchanges, which they hope will promote competition among insurers and drive down the cost of individual and employer-sponsored coverage.

Called DC Health Link, the District’s site will house two separate marketplaces, one for individuals and one for small-
business owners, where residents can purchase plans from several carriers and apply for tax breaks.

“At this point, we are testing the heck out of the system,” DC Health Link Executive Director Mila Kofman said, noting that her team passed the final security inspection from the Internal Revenue Service last week.

All that remains is a final operations review from federal regulators before the team can plug into a central data hub, which will give them access to the information they need from the Internal Revenue Service, Veterans Affairs and Homeland Security. For instance, the hub will connect all state-run exchanges to citizenship and income records, which are necessary to determine whether enrollees are eligible for coverage and tax breaks.

Kofman expects to complete that last step in the coming days, and the site will go live Oct. 1.

On the District’s site, employers with 50 or fewer workers will be able to choose from 267 plans from four carriers: Carefirst, Aetna, United and Kaiser Permanente, the latter three of which have all lowered their rates on the exchange in the past few months. In addition, employers will have the option to either choose one plan for their entire company or select several plans from which their employees can choose.

Once workers make their picks, they and their employers can pay their premiums through the same portal.

“It’s like getting ready to get married — you can’t wait to walk down the aisle, but at the same time, you’re hoping you don’t trip,” Kofman said of the final preparations, adding that the staff has 25 call-center representatives ready to help troubleshoot and walk individuals through the process. “I’m both nervous and excited.”

Meanwhile, some states have already stumbled out of the gate.

In Maryland, for example, the marketplace for individuals will be ready for launch Tuesday; however, the state has elected to delay enrollment for its small-business exchange until the start of next year, when plans were supposed to take effect. Instead, coverage under those plans will commence in March at the earliest.

Joshua M. Sharfstein, chairman of the Maryland Health Benefit Exchange board, said his team needed more time to perfect its portal, making the individual marketplace the first priority during the past few months.

Still, there was good news for the state’s small employers last week, as Maryland insurance officials unveiled the final rates for the small-business exchange, which are comparable to those in the District and lower than those in many states around the country.

Compared with last year, the rates are slightly higher, but they are “consistent with the year-over-year changes we have seen in Maryland’s small group market in 2012 and 2013,” Maryland Insurance Commissioner Therese M. Goldsmith said in a statement.

Officials noted that the costs may be lower for some employers, thanks to new tax credits authorized by the health-care law, which for the past three years have covered up to 35 percent of the cost of health plans for firms with fewer than 25 workers. Next year, the credits increase to as high as 50 percent.

However, Maryland’s delay will postpone employers’ access to the breaks, as starting next year, the credits will be available only through the small-business exchanges.

Maryland employers aren’t the only ones that will have to wait. In Washington state, only one insurance company signed up for the small-business exchange, and it will provide coverage only to certain regions. Others will have no health insurance options when the portal opens next week, and it is unclear how (or if) they will be able to access the credits.

In Minnesota and Wisconsin, meanwhile, state-run small-
business exchanges are set to open on schedule, but government officials have in the last few weeks warned that the programs in both states might have some glitches or limitations when they first launch.

The same may be true of the federal government’s new insurance exchanges.

Most states, including Virginia, elected to fall back on marketplaces set up and run by the U.S. Department of Health and Human Services, which has said the federal exchanges for individuals and employers in those states will be ready to open next week.

However, this summer, officials announced that the federal government’s small-business portal will not allow employers the same flexibility that business owners will have in the District. For the first year, employers will have to choose a single plan for their entire company, rather than the multiple-plan option lawmakers envisioned.

More importantly, software glitches on the federal exchange are making it difficult for the Web site to “reliably determine how much people need to pay for coverage,” according to a report last week by the Wall Street Journal.

In response, Joel Ario, a former HHS official who oversaw health exchange matters at the agency, told The Washington Post’s Sarah Kliff that “nobody is going to say we’re not starting on October 1, but in some situations, you may see a redefinition of what ‘start’ means.”

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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