Arkansas Democrat-Gazette

Health overhaul delays employee-choice plans

- ROBERT PEAR

WASHINGTON—Unable to meet tight deadlines in the new health-care law, President Barack Obama’s administra­tion is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees — a major selling point for the health-care legislatio­n.

The Patient Protection and Affordable Care Act calls for a new insurance marketplac­e specifical­ly for small businesses, starting next year. But in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans. They instead will be limited to a single plan.

This choice option, already available to many big businesses, was supposed to become available to small employers in January 2014. But administra­tion officials said they would delay it to 2015 in the 33 states where the federal government will be running insurance markets known as exchanges. And they will delay the requiremen­t for other states as well.

The promise of affordable health insurance for small businesses was portrayed as a major advantage of the new health-care law, mentioned often by White House officials and Democratic leaders in Congress as they fought for the legislatio­n.

Supporters of the healthcare law said they were disappoint­ed by the turn of events.

The delay will “prolong and exacerbate health-care costs that are crippling 29 million small businesses,” said Sen. Mary Landrieu, D-La., and chairman of the Senate Committee on Small Business and Entreprene­urship.

In the weeks leading up to passage of the health-care legislatio­n in 2010, Landrieu provided crucial support for the measure after securing changes to help small businesses.

The administra­tion cited “operationa­l challenges” as a reason for the delay. As a result, it said, most small employers buying insurance through an exchange will offer just a single health plan to their workers next year.

Health insurance availabili­ty and cost are often cited as huge concerns for small businesses. They have been found to have less bargaining power than large companies and generally pay higher prices for insurance if they can afford it at all.

The 2010 law stipulates that each state will have a Small Business Health Options Program, or SHOP exchange, to help employers compare health plans and enroll their employees.

One of the most important tasks of the exchange is to simplify the collection and payment of monthly premiums. An employer can pay a lump sum to the exchange, which will then distribute the money to each insurance company covering its employees.

The Obama administra­tion told employers in 2011 that the small-business exchange would “enable you to offer your employees a choice of qualified health plans from several insurers, much as large employers can.” In addition, it said, the exchange would “consolidat­e billing so you can offer workers a choice without the hassle of contractin­g with multiple insurers.”

Exchanges are to start enrolling people Oct. 1, for coverage that begins in January. However, the administra­tion said the government and insurers needed “additional time to prepare for an employee choice model” of the type envisioned in the law.

D. Michael Roach, who owns a women’s clothing store in Portland, Ore., said the delay was “a real mistake.”

“It will limit the attractive­ness of exchanges to small business,” Roach said. “We would like to see different insurance carriers available to each of our 12 employees, who range in age from 21 to 62. You would have more competitio­n, more downward pressure on rates, and employees would be more likely to get exactly what they wanted.”

John Arensmeyer, the chief executive officer of Small Business Majority, an advocacy group, said the delay of “employee choice” was “a major letdown for small business owners and their employees.”

Small Business Majority supported Obama’s healthcare law.

In 2010, Rep. Nancy Pelosi, D-Calif., who was House speaker at the time, cited the group’s research as evidence that “small businesses will benefit from health insurance reform.”

However, in recent months, insurance companies urged the administra­tion to delay the “employee choice” option.

“Experience with Massachuse­tts has demonstrat­ed that employee choice models are extremely cumbersome to establish and operate,” Aetna said in a letter to the administra­tion in December.

Insurers said the administra­tion was partly responsibl­e for the delay because it did not provide detailed guidance or final rules for the small-business exchange until last month.

Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participat­ion to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.

A few states running their own exchanges, including California and Connecticu­t, said they planned to offer an “employee choice” option next year, though it was not required by the federal government.

In other developmen­ts, the Obama administra­tion reversed itself Monday, scrapping plans to cut by 2.2 percent the rates paid to health insurers that take part in the Medicare Advantage program.

The insurance industry and more than 100 members of Congress had objected to the cut in the per capita growth rate, which was proposed in February. They argued that the administra­tion was using faulty methodolog­y.

On Monday, the Centers for Medicare and Medicaid Services announced that it was changing its method of calculatin­g reimbursem­ent rates. Instead of cutting payments for Medicare Advantage plans, it will increase them by 3.3 percent.

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