That has left paper applications or direct signups with insurers or through brokers as the only options for most small companies. But signing up outside the SHOP exchange does not qualify companies to receive a tax credit for buying coverage for their workers. Under the Patient Protection and Affordable Care Act, some companies that buy through the SHOP exchanges can qualify for tax credits, offsetting up to half their premium payments.
In states where online SHOP applications are being processed, the enrollment numbers are small. Kentucky has signed up just 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.
Erik Larson, chief operating officer for Minnesota's exchange, said he's not too concerned about the slow pace of enrollment. That's because online enrollment was initially plagued by technological problems that have eased. But beyond that, he added, more than 2,000 employers have taken initial steps to establish accounts, suggesting pent-up demand.
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 workers' 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.
Roger Feldman, a healthcare economist at the University of Minnesota, is not surprised by the lackluster performance of the SHOP exchanges. He worries that the small-business marketplaces will attract companies with disproportionately sicker, more expensive workers, which will cause premiums to spike.
Feldman points to a precursor program in Minnesota, the Minnesota Employers Insurance Program, that collapsed in the late 1990s. A significant problem was that the risk pool was too small and therefore prices weren't competitive. He predicted that the SHOP marketplaces are headed for a similar fate.
The SHOP exchanges, however, aren't under the same time pressure as the individual marketplaces. That's because small businesses can sign up anytime throughout the year.
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