Time to com­par­i­son-shop

Modern Healthcare - - PAYERS - —Jonathan Block

Agrow­ing num­ber of pri­vate in­sur­ance ex­change op­er­a­tors are tar­get­ing the small-em­ployer mar­ket, and that could have a neg­a­tive im­pact on the pub­lic small busi­ness ex­changes es­tab­lished by the Pa­tient Pro­tec­tion and Af­ford­able Care Act, some ex­perts say.

Ben­e­fits ex­perts say that there are ad­van­tages and disad­van­tages for small em­ploy­ers with both the pub­lic or pri­vate ex­change op­tion, and each com­pany will have to de­cide based on its in­di­vid­ual needs. Or, of course, small em­ploy­ers could choose to of­fer cov­er­age on their own with­out an ex­change, or sim­ply not of­fer cov­er­age to their em­ploy­ees.

The Small Busi­ness Health Op­tions Pro­gram (SHOP) ex­change in each state will start sign­ing up em­ploy­ees of busi­nesses with up to 100 em­ploy­ees, de­pend­ing on the state, start­ing in Oc­to­ber and launch cov­er­age in Jan­uary 2014. Un­der the ACA, com­pa­nies with 51 or more full­time em­ploy­ees must of­fer cov­er­age, or else face a fine of $2,000 per em­ployee. Com­pa­nies with 50 or fewer work­ers do not have to of­fer cov­er­age. But the ACA of­fers a fi­nan­cial in­cen­tive for them to buy cov­er­age through the SHOP ex­change. If th­ese smaller firms—ones with fewer than 25 full-time em­ploy­ees—have aver­age salaries of less than $50,000 and pay at least half their em­ploy­ees’ pre­mi­ums, they qual­ify for tax cred­its of up to 50% of their pre­mium costs if they buy through the ex­change.

How­ever, pri­vate ex­changes might end up at­tract­ing small busi­nesses with mostly young and healthy work­ers, such as dot-com com­pa­nies, that would not qual­ify for the tax credit. If that were to hap­pen, fewer health­ier peo­ple would end up in the SHOP ex­changes, lead­ing to ad­verse se­lec­tion and po­ten­tially driv­ing up SHOP ex­change pre­mi­ums.

But whether in a pri­vate ex­change or the SHOP ex­change, health plans still will have to abide by ACA mar­ket rules cov­er­ing all in­sur­ance plans, such as es­sen­tial health ben­e­fits, lim­its of pre­mium dif­fer­ences be­tween younger and older en­rollees, and a ban on med­i­cal un­der­writ­ing.

The SHOP ex­changes were de­signed to make af­ford­able in­sur­ance more avail­able to smaller busi­nesses that gen­er­ally have ac­cess to fewer plan op­tions and pay higher pre­mi­ums than larger com­pa­nies. In ad­di­tion, the SHOP ex­changes were in­tended to re­lieve small em­ploy­ers of many of the ad­min­is­tra­tive

bur­dens of of­fer­ing health ben­e­fits to their work­ers. The idea was to let them pay the ex­change a lump sum for each em­ployee, al­low­ing the work­ers to take that amount and pick a plan. Em­ploy­ees of each par­tic­i­pat­ing small busi­ness were sup­posed to have a choice of at least sev­eral plans. Tra­di­tion­ally, small busi­nesses have of­fered only one plan op­tion.

How­ever, HHS said that in the 33 states where the fed­eral govern­ment will run the SHOP ex­changes, there will be no mul­ti­ple choice of plans un­til 2015 be­cause of tech­ni­cal chal­lenges. But state-op­er­ated SHOP ex­changes in Cal­i­for­nia, New York and other states say they will of­fer em­ploy­ees mul­ti­ple choices. In those 33 states, small em­ploy­ers in 2014 will pick one plan that will be avail­able to their work­ers.

Paul Fron­stin, a se­nior re­search fel­low at the non-par­ti­san Em­ployee Ben­e­fit Re­search In­sti­tute in Wash­ing­ton, says whether small em­ploy­ers buy through the pub­lic or pri­vate ex­changes will de­pend on which of­fers more choices, bet­ter pre­mi­ums and bet­ter value. He pre­dicts that par­tic­u­larly in 2015, SHOP ex­changes will more likely of­fer mul­ti­ple plan choices. “There’s a small chance you are go­ing to get a bet­ter deal in a pri­vate ex­change,” he says.

Vin­cent Ash­ton, CEO of HealthPass New York, a pri­vate ex­change serv­ing em­ploy­ers with no more than 50 em­ploy­ees, says that, by it­self, the tax credit for buy­ing through the SHOP ex­change may not be a big enough in­cen­tive to sway small busi­nesses to buy through those ex­changes, since the amount of the credit de­clines with the num­ber of em­ploy­ees and a larger aver­age salary. In ad­di­tion, pri­vate ex­changes have the ad­van­tage of of­fer­ing other health ben­e­fits, such as den­tal cov­er­age, which won’t be avail­able through SHOP.

While ac­knowl­edg­ing that pri­vate ex­changes with only a sin­gle par­tic­i­pat­ing in­surer may not of­fer as many plan choices as the SHOP ex­changes, Ash­ton says pri­vate ex­changes might be able to pro­vide bet­ter as­sis­tance to em­ploy­ers and em­ploy­ees.

Still, Ash­ton says he hopes the SHOP and pri­vate ex­changes both suc­ceed be­cause their fates are in­ter­twined. “I want the New York SHOP ex­change to suc­ceed,” he says. “Be­cause if it doesn’t, it’s go­ing to be a black eye for my ex­change, as (many peo­ple) will lump pri­vate and pub­lic ex­changes to­gether.”

He says both types of ex­changes, while they will be com­pet­ing, are in the busi­ness of giv­ing em­ploy­ers and em­ploy­ees more choice of plans. “You are both try­ing to drive home the same mes­sage to the mar­ket­place that em­ploy­er­spon­sored in­sur­ance doesn’t nec­es­sar­ily mean no in­sur­ance choice,” he says.

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