Health insurance exchanges for small businesses focus of study

Small employers like several features of the new Small Business Health Options Program (SHOP) that is part of the health insurance marketplaces for which enrollment is available now under the Affordable Care Act (ACA), according to a new study published online first in Health Affairs. The SHOP exchanges open for business in every state Jan. 1 for companies with 50 or fewer full-time workers, but challenges remain, say the researchers.

University of Chicago investigators randomly surveyed 604 small companies, those that currently offer insurance to employees and those that do not. They found that small employers like the idea of receiving a single bill, the ability to write one check every month to cover insurance, and functionality that enables them to compare costs, benefits and physicians in networks among plan offerings.

Some of the study's other findings:

• Surveyed companies said cost is the most important factor in their purchasing decisions related to health insurance.
• The proportion of employers willing to shift to narrow-network plans, which contract with no more than 25 percent of the providers in a community, increased to 82 percent, with a cost savings of 20 percent.
• Eighty percent of small-group employers offering health insurance said they use brokers to help them select and manage their health insurance plans.

According to the Department of Health and Human Services (HHS), employers buying health insurance through the SHOP marketplace also may qualify for a small business healthcare tax credit to help defray their premium costs. Numerous small businesses with fewer than 25 full-time-equivalent employees already have received a tax credit of up to 35 percent of their contribution to employees’ health insurance premiums, HHS says. Beginning next year, the tax credit will be worth as much as 50 percent of the employer’s contribution to premiums and will be available only to those purchasing coverage through the SHOP.

Two challenges for the SHOP exchanges, according to the study authors, are that brokers need to accept the entities and that the number of self-insured small employers is expected to increase. Under the ACA, self-insured plans do not have to provide essential health benefits or pay premium taxes.

"This survey quantified a much-discussed unintended consequence of the [ACA]: a movement to self-insurance, which poses a threat not just to SHOP exchanges but to the entire small-group market," they conclude.

The authors suggest that the ACA be amended to prohibit the sale of stop-loss coverage—coverage against catastrophic events—to small firms. This change would avoid undermining many benefits of small-market reforms and SHOP exchanges, they say.

The study also will appear in the November print issue of the publication.

See other content by this author here.

Lois Bowers

Lois A. Bowers was senior editor of I Advance Senior Care / Long-Term Living from 2013-2015.