While more large employers dip their toes into the health insurance exchange pool and consider the cost benefits of using an exchange, small employers will be diving into the government-sponsored program starting Oct. 1 when the state insurance marketplaces begin accepting their first customers.
These exchanges, or online health care benefits shopping sites, will be open to companies with 50 employees or less, but starting in 2016 those with up to 100 workers will be able to buy insurance, and in 2017 employers of all sizes will have the option to participate.
How the small-business health exchanges, called Small Business Health Options Program, also known as ‘SHOP,’ perform may provide large employers a glimpse of what’s to come. Much of the public’s attention has been focused on the individual market, but the Affordable Care Act calls for the establishment of two exchanges—one for individuals and another for small employers.
Interest in online benefits marketplaces among large employers seems to be growing, and a number of consulting firms including Aon Hewitt, Mercer and Towers Watson & Co. have launched private corporate exchanges in the past two years.
The SHOP exchanges are “something that large employers will be looking at as they kick the tires,” says Kevin Counihan, CEO of Access Health CT, Connecticut’s health insurance exchange. “They will be looking at participation rates, disruption issues, questions from employees, whether or not you can self-fund the plans, and they’ll be looking at all the different exchange models.”
Whether the sites will be fully functional by Oct. 1 remains to be seen as states that are building their own marketplaces scramble to meet the deadline. So far, 15 states and the District of Columbia are building their own exchanges. Most have left the job to the federal government.
A key selling point of a SHOP exchange is the choice of plans, insurance carriers and contribution levels that it offers employees. Typically, small businesses can only afford to offer a single health plan, but the SHOP exchanges will allow them to offer employees a variety of options as required by the health care reform law.
However, in April the Obama administration delayed this requirement by one year, which means that many states will only be offering one plan—a move that supporters see as a setback.
“Our organization feels that the HHS made the wrong call there,” says Rhett Buttle, vice president for external affairs at the Washington-based advocacy group Small Business Majority. “When you are with a large employer, you get a choice of three or four plans. It’s what makes the exchange attractive to small employers. The decision to delay is a bump in the road.”
Connecticut is one of the few states that will offer employees multiple plans and coverage choices from the start, Counihan says. The state is using HealthPass New York to help administer the program and Chicago-based bswift for technological support. HealthPass is a developer of private small-business insurance exchanges.