A key selling point of Obamacare was that it would offer more choice and lower costs to small businesses. But businesses aren’t buying, and now they only have a tiny window to avoid a major hurdle to getting coverage.
For one month, from Nov. 15 to Dec. 15, a small business that buys a plan in the Obamacare-created Small Business Options Program marketplace doesn’t have to meet participation requirements, which require that businesses with up to 50 employees ensure that at least 75 percent of their employees enroll.
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“That has been difficult for very small employers to do,” said Sarah Lueck, senior policy analyst for the Center on Budget and Policy Priorities think tank.
The annual window comes at a time when small businesses haven’t taken to the Small Business Health Options Program, or SHOP, created to offer more plans for small businesses.
About 85,000 people have bought coverage through the SHOP marketplaces as of May, the latest data available, according to the Centers for Medicare and Medicaid Services, the agency that oversees the marketplaces. It is a boost above the 76,000 individuals who bought coverage as of June 2014. However, it is a far cry from projections by the nonpartisan Congressional Budget Office of 1 million people in 2015 and 3 million people by 2017.
A myriad of problems have hindered the marketplaces, critics have said.
The marketplaces were supposed to be online in November 2013, but they were delayed as the administration prioritized fixing healthcare.gov., so the marketplaces went online a year later.
Employers could have still signed up for SHOP through their brokers or agents starting in 2013, but there was not much outreach from the Obama administration to those agents, said Kevin Kuhlman, director of federal public policy for the National Federation of Independent Businesses, a small business trade group.
Brokers were also pretty hesitant, Lueck said.
“Brokers were either not interested in the SHOP or irritated by the SHOP or just felt like it was a competitor to what they were trying to do,” she said.
A recent National Federation of Independent Businesses survey found that more than 60 percent of small businesses surveyed saw premium increases over the past year.
Cost is a major reason small businesses don’t offer insurance. The survey found that of the 60 percent of small employers not offering insurance, 52 percent cited cost.
Kuhlman said new requirements have ballooned costs.
The law requires small group plans to provide coverage for items such as laboratory services, prescription drugs, preventive and wellness services and mental health treatment.
“We need to focus on affordability and spread insurance that way, as opposed to focusing on expensive mandatory benefits,” Kuhlman said.
The law has a small business tax credit for those who go through the SHOP, but some businesses didn’t know how to apply for it, Lueck said.
Despite the SHOP problems, Lueck said Obamacare offers key protections for small businesses.
Among them are new rules that don’t allow insurers to consider health expenses when they set insurance rates.
“The system prior to the Affordable Care Act was that small businesses could be facing higher premiums one year compared to the prior year because they had a significant health expenses,” she told the Washington Examiner.
CMS told the Examiner that the agency has been working to educate small businesses about the tax credits and opportunities with SHOP.
It added that SHOP was created to help small businesses get better insurance rates, since larger companies with hundreds of employees could use their size to get a better deal.
“Historically, small businesses have been charged 10 to 18 percent more for the same benefits compared to large employers, and were often presented with a limited number of choices,” the agency said. Since November 2014, about 300 to 500 businesses enrolled through healthcare.gov, the agency added.
But the SHOP issues haven’t escaped notice from Congress, which got a major bill concerning the marketplaces signed into law last month. The bill prevents the definition of a small group market from changing.
The change shields medium-sized businesses from major premium hikes of up to 20 percent.
Starting in 2016, the law was supposed to move companies with 51 to 100 employees from the large group insurance market to the small group market.
Lawmakers on both sides of the aisle objected, saying that it would open such mid-sized businesses to costly coverage requirements and higher premiums.
