Obamacare’s Small Business Health Exchanges Get a Test Run

By Patrick Clark
October 28, 2014 - Businessweek

The federal initiative intended to help companies with 50 or fewer workers negotiate better deals for employee health coverage was, to a large extent, a casualty of last year’s rocky Obamacare rollout. To prevent a repeat, the White House is giving the plan a head start this year.

In five states, the government has opened partial access to the Small Business Health Options Program (SHOP) before the Nov. 15 start of this year’s open enrollment period, the U.S. Department of Health and Human Services said on Monday. That means businesses in Delaware, Illinois, Missouri, New Jersey, and Ohio can set up a SHOP account, select a broker, complete an application to see if they’re eligible, and upload an employee roster. They’ll have to wait until next month to compare prices of plans offered on the small business exchange.

“The users of Early Access are helping us to test the new online features, which will give the SHOP Marketplace important information about the user experience to begin the continuous quality improvement process before the site goes live,” Rhett Buttle, director of private-sector engagement for HHS, wrote in a blog post published yesterday.

The people running the small business marketplaces didn’t get a lot of practice last year. In the 36 states whose SHOPs were managed by the federal government, exchanges were launched late and never made it online. (Businesses had to fill out paper applications to enroll.) Uptake was spotty even on state-run exchanges that did open on time.

Beyond the pilot program, there are at least two factors that suggest the SHOPs may have a better second act. Last year many small businesses chose to renew pre-Obamacare plans that provided less coverage for cheaper prices, giving them little incentive to shop on small business exchanges. More of those businesses may be drawn to SHOP this year.

The prices may make SHOP plans attractive compared with other policies, according to the research organization NORC at the University of Chicago. Earlier this year the group compiled insurance pricing from SHOP exchanges in 26 states. On average, prices were 7 percent (or about $220 a year) lower than comparable coverage sold outside the small business exchanges.