Various state and private efforts to help small businesses offer coverage and to provide them with better choices have yielded mixed results.
What’s the issue?
Small businesses have historically been less likely than larger firms to offer comprehensive health insurance or a choice of health plans, and their employees are more likely to be uninsured or underinsured. In addition to reforming insurance rules for the small-group market to address marketwide inefficiencies that have hindered many small businesses from offering coverage, the Affordable Care Act (ACA) created Small Business Health Options Program (SHOP) Marketplaces in each state.
SHOP Marketplaces were intended to further assist small businesses with offering affordable coverage by providing a one-stop-shop for small businesses and their employees to compare and enroll in qualified health plans, promoting transparency and price competition among participating insurers and creating a mechanism for employee choice, in which small-business employees can select from among multiple insurers and health plans made available through the SHOP.
To date, the majority of state-based SHOP Marketplaces have chosen to implement employee choice, but federal regulations have made implementation of employee choice voluntary until 2016. This feature has not yet been made available in federally run SHOP Marketplaces. Fourteen states with federally facilitated SHOP Marketplaces are expected to offer employee choice for 2015, with the remaining 18 federally run SHOP states to follow in 2016. Not all stakeholders have embraced the employee-choice concept: While a majority of small businesses say they are interested in giving employees more plan choices, detractors have raised concerns that employee choice may overwhelm employees with too many choices or result in higher premiums in the SHOP if higher-risk employees can select more comprehensive plans than lower-risk employees.
The implementation of employee choice has also been hindered in some instances by broader technological problems with health insurance Marketplaces and insufficient insurer participation. While it is too early to determine the success of employee choice and SHOP Marketplaces generally, their phased implementation across the country offers an important opportunity to evaluate these longstanding policy ideas.