Health insurance marketplaces for small businesses have largely been a bust in their first year of operations.
That's in large part because online enrollment hasn't been available for businesses in the 32 states relying on the federal HealthCare.gov website. In addition, several state-based exchanges, most notably Covered California, also have required businesses to send in paper applications to enroll. That undoubtedly served as a deterrent for companies with fewer than 50 employees that might otherwise have considered shopping for coverage through the Small Business Health Options Program (SHOP).
“It's been a rocky beginning for sure,” said Linda Blumberg, a senior fellow at the Urban Institute. “The attention really in the first year was focused on the non-group portion of the marketplace. As a result, SHOP really got a bit of the short end of the stick.”
Early renewals were also a major factor in limiting the number of SHOP enrollments in 2014. Many health plans encouraged small businesses to renew their coverage just before the market reforms of the Patient Protection and Affordable Care Act went into effect. By some estimates, roughly 70% of small-business groups opted for early renewals, severely depleting the potential market for SHOP exchanges. The Obama administration's decision to allow plans that don't adhere to the coverage requirements of the federal healthcare law to continue for up to three years is expected to further limit the number of businesses initially shopping for coverage through the government-run marketplaces.
“In many, many states, because the number of early renewals was so high, they likely didn't even consider SHOP,” said Kevin Lucia, a research professor at Georgetown University Health Policy Institute's Center on Health Insurance Reforms.
Grant Lahmann, national outreach director for Small Business Majority, a national advocacy group, said businesses often opted for early renewals as their safest option, given the technological problems the federal and state exchanges experienced. “There was a lot of uncertainty and misinformation in the business community, quite frankly, going into 2014,” Lahmann said.