The healthcare reform law's insurance exchanges
for small businesses have faced serious implementation problems, limited employer interest, and lack of insurer participation. The shortcomings are sure to become fodder for candidates campaigning against the Patient Protection and Affordable Care Act
in this spring's primaries as well as in the fall's mid-term Congressional elections.
Already, small business interests who had opposed the healthcare reform law are basically saying, “I told you so,” about the exchanges, sentiment that candidates seeking small business backing are likely to echo.
“I'm not surprised by anything at this point in time; it's a little disappointing,” said Kevin Kuhlman, manager of legislative affairs at the National Federation of Independent Business, which had opposed the ACA. “We hold out a little bit of optimism and hope that some changes are made to make these things more attractive, but, in their current form, I don't see how they can gain traction.”
Healthcare issues, including the problems with small business exchanges, will figure more prominently in such battleground states as Georgia, Arkansas and Louisiana, all of which have closely watched Senate races this year, said Julius Hobson, senior policy adviser at Polsinelli, a business and litigation law firm. While both parties claim small business backing, it's likely small business interests in these key states lean more Republican and so will respond to criticism of the small business exchanges.
“We're going to be hearing more and more” about ACA-related problems such as the small business exchanges, Hobson said. “If nothing else, because Republicans intend to make healthcare reform the cornerstone of their campaign message in the fall and anything related to that” will become fair game for them to attack.
Supporters say it likely will take until next year before enrollment in small business exchanges picks up significantly, well after the fall elections.
The Obama administration has not released enrollment totals for the Small Business Health Options Program (SHOP) exchanges, which make plans available to businesses with up to 50 full-time employees. The CMS said it is working with insurers on how to generate that data accurately and anticipates totals will be available this year. Of the states running their own exchanges, California and Colorado are two of the leaders. California reports that 571 employers have signed up 4,490 workers for coverage, while Colorado reports 101 employers with 1,055 workers.
In November, federal officials announced they were delaying online enrollments in the federally operated SHOP exchanges, which serve 32 states, until the 2015 open enrollment period. Maryland's state-run exchange, which has been plagued by technological problems, isn't allowing small business enrollments until April. Even California's exchange, which has been successful in signing up individuals and families, announced this month that it was temporarily halting online enrollments for small businesses.
That has left paper applications or direct signups with insurers or through brokers as the only options for most small companies across the country. But signing up outside the SHOP exchange does not qualify companies to receive a tax credit for buying coverage for their workers.
In states where online SHOP applications are being processed, the enrollment numbers are small. Kentucky has signed up only 29 businesses, with coverage for roughly 200 individuals. In Minnesota, the most recent enrollment figures show 119 small businesses are providing plans to fewer than 600 workers. That's less than 10% of the enrollment projected for 2014 by state officials.
The SHOP program was established as part of the healthcare reform law to provide a broader choice of affordable plans for small companies and their workers. Initially, SHOP exchanges were made available to businesses with up to 50 employees—which are not required to offer coverage to their workers. In 2016, that is scheduled to expand to companies with up to 100 workers.
The original concept was to have small businesses pay a fixed amount for their worker's coverage and then let the employees pick a plan on the SHOP exchange, giving them a broader choice of plans. But last summer, the Obama administration said it would delay the employee-choice feature until 2015 because of technical difficulties. Several state-run exchanges, including New York, went ahead with the employee-choice design.
California's online marketplace is unable to process enrollment applications owing to software glitches. “Covered California is experiencing technical difficulties with the enrollment website, which led to an unplanned system outage beginning yesterday,” read a note on the website Friday. “We are working as quickly as possible to resolve this issue.” California's exchange has been among the most successful in the country, with more than 800,000 enrollments in private plans through the first two weeks of February. The technology troubles surfaced with just over a month left in the open enrollment period.