Small business groups and some lawmakers are urging the Obama administration to reverse course on plans to wait one year to give employees of small businesses a choice among health plans obtained through new exchanges.
HHS in March proposed delaying the requirement in the 33 states where the federal government will operate insurance marketplaces either alone or in partnership with state officials next year. The comment period on the draft regulations for the small business health options program, known as SHOP
, ended April 1.
Some observers say the so-called transitional policy signals the depth of the challenge ahead to have insurance marketplaces ready for individuals and small businesses by Oct. 1. Even though the policy allows state-operated SHOP exchanges to go ahead with allowing employees to choose their own plan, it's not likely that the states will, said Robert Laszewski, a former insurance executive and president of Health Policy and Strategy Associates, a consulting firm.
Laszewski, whose clients include health insurance companies, hospitals and physician groups, expects state-run SHOPs will follow HHS' lead. “Offering a single employer all of the exchange options is a very complex undertaking and all of the exchanges really have their plates full getting ready for Oct. 1. A delay means that the exchange isn't going to offer any advantage over the employer simply staying with their existing insurer.”
Under the proposed rule, employers could select a single group plan for all of their employees through a SHOP exchange, instead of allowing employees to select plans from different insurers and across different levels of benefits. That element of choice is intended to put small businesses on an even keel with individuals who would get their coverage through the individual state health insurance exchanges.
“In 2015 employees will be able to choose from the full range of plans in the marketplace," an HHS spokesman said in a prepared statement.
Critics of the policy say the delay undermines the whole purpose of those exchanges and eliminates the advantages the marketplaces were intended to create.
The delay “leaves unclear what advantages the SHOP exchange offers employers and employees over the non-SHOP small group market,” Sen. Mary Landrieu (R-La.), chairwoman of the Senate Small Business & Entrepreneurship Committee, said in a letter to HHS Secretary Kathleen Sebelius. “Furthermore, by reducing participation in the SHOP exchange and therefore driving more people toward individual coverage, the delays may weaken the strong employer market that is essential for the success of many of the important insurance reforms included in the ACA.”
Landrieu is not alone in her desire to see the employee choice aspect of SHOP exchanges take effect in 2014 as originally planned.
Bob Graboyes, a senior fellow for health and economics at the National Federation of Independent Business, said choice would have increased competition in the SHOP exchanges and could have caused downward pressure on premium rates. Without it, he said, it's likely that more employers will drop coverage altogether, pay a noncoverage penalty, and send employees to the individual exchanges.
Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, called it “highly ironic” that the administration would compromise a key ambition for small-group coverage, which was a focus of the reform law. “We would hope that this is a problem that can be cured before 2014, or at least, the earliest possible opportunity,” Trautwein said.
Insurers, however, appear to be behind the proposed delay. WellPoint, for example, wrote in a letter to Sebelius that it applauds HHS for “recognizing the complexity in associated with implementing employee choice” in the small-business programs.