When I wrote last week about the slow start for Obamacare's small business exchanges, I mentioned that some states could slow down the marketplaces' progress even further in 2015 because of a possible delay recently created by the Obama administration.
The small business exchanges, like the law's individual exchanges, are a virtual marketplace where businesses with 50 or fewer employees can compare health plans. Besides offering a limited tax credit, Obamacare small business exchanges, or SHOP, are supposed to offer one particular feature that changes the healthcare landscape for small companies: choice.
Through what's known as "employee choice," small businesses can send employees to the SHOP exchanges with a set contribution, and then the employee can pick a health plan among those offered on the SHOP exchange. This employee choice feature is "crucial" to the success of the SHOP exchanges, according to Small Business Majority, a group supporting the Affordable Care Act.
The SHOP exchanges are supposed to provide small businesses with multiple health plan options, similar to what large businesses have. Small businesses also have less bargaining power and may face higher insurance costs, so the exchanges are supposed to level the playing field for them.
But the Obama administration delayed employee choice in 2014 for nearly the three dozen SHOP marketplaces that the federal government is running — those exchanges are open for business, but employers determine which insurance plans their employees can pick, just like how things worked before the ACA. The administration had also given states with federal SHOPs until this past Monday to request another year-long delay of the employee choice program.
Without the choice feature, advocates fear the SHOP exchanges won't be as much as a draw for businesses. From what limited evidence we have so far, enrollment in the SHOP exchanges have gotten off to a slow start since October, for a number of reasons.
Washington and Lee University law professor Tim Jost counts at least 14 states that requested a delay: Alabama, Alaska, Arizona, Idaho, Kansas, Louisiana, Maine, Montana, New Hampshire, North Dakota, Oklahoma, Pennsylvania, South Carolina and South Dakota. A spokesman for the Centers for Medicare and Medicaid Services, which oversees the exchanges, declined to say how many states had requested the delay.
New Hampshire, in its letter to the Department of Health and Human Services, writes that insurers and brokers pushed for the year-long delay, citing concerns about adverse selection and other problems that set back development of the SHOP exchanges.
It's not enough for states just to request a delay of the employee choice — they have to make a case that implementing the feature could harm the insurance marketplace. Small Business Majority, which has been critical of the administration's decision to allow the delay, told me it doesn't believe that most of the 11 state requests it reviewed meet that standard.
The Obama administration is expected to make a decision on the states' requests by early next week.
This post has been updated with a response from the Centers for Medicare and Medicaid Services.