Despite fixes, Obamacare’s small business site still isn’t luring employers. What gives?

By J.D. Harrison
December 3, 2014 - The Washington Post

After a laundry list of glitches popped up last year, Obama administration officials set to work to fix the health law’s online insurance marketplace for small businesses. Now, two weeks after re-launching the federal exchange, it appears they have ironed out most of the technical problems.

Now they have a different problem on their hands, one that no team of software engineers can solve: Disinterest from small employers.

This, from our colleague Amy Goldstein:

During the first week, [the small business side] of HealthCare.gov drew 200,000 visits, compared with more than 1.5 million people who looked at the Web site’s health plans for individuals, according to the Centers for Medicare and Medicaid Services (CMS), the branch of the Department of Health and Human Services overseeing the ­online insurance marketplaces. CMS officials would not provide figures on how many small businesses in that first week decided to offer workers coverage through the health plans created for them — or how many workers, in turn, have bought it. (Read the full story here)

This time around, a dearth of small-business visitors can’t be blamed on a dysfunctional small business portal, often called the SHOP exchange.

“The SHOP Marketplace is performing well, call volume is up at our SHOP Call Center, and consumers are getting into the system and shopping for coverage,” Tasha Bradley, a CMS official, wrote in an e-mail to On Small Business. She added that the small business site, often called the SHOP exchange, has suffered “only a small number” of technical issues thus far.

Unlike last year, it doesn’t appear that the portal is playing second fiddle to the individual exchange in the administration’s outreach efforts, either. In October, the White House held an information session for insurance brokers who mostly work with small businesses. Officials also heavily publicized a SHOP exchange test run for employers and brokers in five states ahead of the nationwide launch on November 15.

Perhaps the insurance prices on the exchange are too high.

Alas, it’s not that, either.

Small-business coverage on the law’s new marketplaces are on average about 7 percent cheaper than comparable plans offered elsewhere, according to analysis conducted by a team of researchers at the NORC research institute at the University of Chicago. Meanwhile, the White House last week announced that premiums for small-business plans on the exchange have remained flat or fallen slightly compared to last year — a starkly different trend than what has been reported off the exchanges, where rates for small group plans have been rising at a fast clip.

So why aren’t small business owners rushing to this new-and-improved, competitively priced and mostly glitch-free insurance marketplace? There appear to be several reasons.

For one, the Obama administration last year announced that small businesses could re-enroll in existing, non-Obamacare-compliant plans for one more year, and insurers have reported that many took advantage. Consequently, some companies aren’t yet in the market for new plans.

Additionally, the Government Accountability Office this fall released a report stating that tax credits offered exclusively through the exchanges — intended to be one of the main draws for small businesses — seem to be “too small and administratively complex to motivate many employers to enroll.”

And lastly, the federal small business site, though largely repaired, re-opened this fall still lacking an important feature that would allow employers to give their workers a choice of several plans from different insurers. Several state-run exchanges still don’t have that option, either.

Without those perks, the small-business exchange has simply lost its luster, as one broker explained to Goldstein:

“You really run out of reasons to go into the SHOP,” said Nicholas Moriello, a broker in Newark, Del., who runs that state’s largest independent health insurance agency. “We’ve only had a small handful of businesses dipping their toe in the water. Less than five.”