Are Obamacare's SHOP Exchanges Doomed?
Obamacare's SHOP exchanges have certainly had a hard time getting off the ground. Healthcare.gov--the federal site that sells exchange-based health plans for 36 states--has repeatedly delayed the rollout of online shopping for small business owners. (That function won't be available until November 2014.) In the meantime, business owners in those states who want to buy exchange plans--and potentially qualify for health-care tax credits--must sign up through an insurance broker or deal directly with insurance providers.
The states that are running their own exchanges have not all managed to launch SHOPs online yet, or to launch them at all. Oregon's small-business exchange is on hold with no specific date to open; Maryland's SHOP won’t launch until April. But even in states where online shopping works and enrolling in the plans is (relatively) easy, buyers are staying away in droves. Despite the lure of tax credits worth up to 50 percent of employer-paid premiums for SHOP-plan coverage, by mid-January only 14 companies in Kentucky had signed up for an exchange plan. Colorado and Connecticut had each enrolled about 100 small businesses. In New York, about 5,000 small business employees had signed up for plans. There’s no business enrollment data available yet for Healthcare.gov.
The Centers for Medicare and Medicaid Services (CMS) is predicting depressed enrollment numbers until Healthcare.gov's technical problems are resolved this fall. Apart from the technical issues, low business enrollment numbers likely reflect the fact that many companies renewed or implemented non-Obamacare-compliant plans before January, to avoid rate increases resulting from mandatory community rating in the small group insurance market. These pre-Obamacare plans can’t be renewed again, though. So, by the end of 2014, when online exchanges should be working better, small business signups could surge.
Then again, it may turn out that few under-50-employee companies feel compelled to offer benefits, since the law doesn’t require it and employees can easily find plans--and subsidies--for themselves in the individual marketplace. And it remains to be seen whether more demand will bring more insurers and plan types into the SHOPS, which in many states include just one or two carriers.
Still, some entrepreneurs are pressing on. Christina Rae, president of Buzz Creators, a 4-year-old PR and marketing firm based in Westchester, New York, felt strongly about providing health coverage for her first and only employee. After hitting glitches in her first couple of attempts, she waited a while and found a much-improved New York State healthcare exchange an easy place to compare plans and prices. She was in the midst of choosing between two different Gold-level plans when we spoke recently. “I had my own major health-care crisis 12 years ago and was in the hospital for two months” says Rae, who for years enjoyed a big-company health plan. “I know how important it is to have good insurance, and it’s critical to the growth and success of my business as we add employees.”
Have you tried shopping or bought a health plan through your state SHOP exchange? Please leave a comment below, and tell us about your experience.