The SHOP Is Open. Selections May Be Limited
Among business owners who like Obamacare--yes, they exist--the thing they tend to like most is the creation of SHOP Exchanges, state-run marketplaces where small employers and their staffers can shop for competitively priced health plans.
Unfortunately, the shelves at the new health-care shops may be sparser than anticipated.
The Affordable Care Act calls for every state to have SHOP exchanges up and running by January 2014. So far, only 17 states and the District of Columbia are on track to do that. In most states, the exchanges will be created and administered by the federal Department of Health and Human Services.
As originally proposed, employers using the exchanges would pick a given plan level (bronze, silver, gold, or platinum depending on the percentage of total costs the plan covers.) Employers would then have the option of allowing employees to choose from multiple carriers offering plans at that level. But in draft transitional rules published in the March 11 Federal Register, the HHS is proposing that full implementation of this “smorgasbord” model be postponed for a year--at least in the federally administered exchanges.
Instead, the federally run exchanges would be permitted to limit employers to just one health plan at their chosen level in 2014. The state-run SHOPs could choose either approach. The extension is designed to give the government, insurers, employers, and benefits brokers more time to work out the logistics of the employee choice model, while ensuring that the basic SHOP program gets started on time.
For business owners, this probably sounds more alarming than it actually is. For one thing, most small businesses already offer coverage through a single provider. Restricting employee choice also could also help keep premiums down, says Steve Wocjik, vice president of public policy at the nonprofit National Business Group for Health.
“When you give employees more choices, there’s more risk of adverse selection,” he says. Translation: Grouping all employees--young, old, sick, and well--into a single large group, rather than several smaller ones, helps create a more favorable risk pool, in which the lower medical costs of healthier employees tend to balance out the higher costs of those who are less well.
Nonetheless, says Wocjik, “One of the selling points of the exchanges is the expanded array of choices. Now the first impression of exchanges might not be as positive.”
Still, for most small employers (generally defined as those with fewer than 100 employees) seeking affordable health care, a SHOP exchange with fewer options is better than no SHOP exchange at all. At the very least, purchasing a qualifying health plan through a SHOP, could qualify some businesses with less than 25 employees for a credit for up to 50 percent of employer premium costs. The HHS is taking comments on the proposed transitional SHOP rules by mail or email through April 1.
In fact, the agency has been quite responsive to employer comments so far, says Wocjik. And keep in mind that comments don’t have to be complaints. “It’s worth sending comments if you like something, too” says Erin Estey Hertzon, an associate specializing in healthcare issues at Hogan Lovells in Washington, D.C.
You can read the proposed transitional rules on employee choice, plus related proposals on special enrollment periods and premium aggregation, here. If you want to weigh in, refer to file code CMS-9964-P2. To comment electronically, go here, and follow the “submit a comment” instructions.