Small-Group Marketplaces Need Fixing, Senators Told

The SHOP marketplaces suffer from IT problems, long waits for service.

  • by News Editor, MedPage Today

WASHINGTON -- Lots of issues need to be worked out before the Affordable Care Act's special health insurance exchanges for small businesses can be widely used, an expert and several small business people told a Senate subcommittee.

"SHOP [the Small Business Health Options Program] is an incredible opportunity for small business, but it is a dismal failure," Thomas Harte, owner of Landmark Benefits, a Hampstead, N.H. insurance broker, told the Senate Subcommittee on Primary Health and Retirement Security at a hearing on Tuesday.

For example, Harte said, if, while entering an employee into the SHOP database, an employer lists the wrong birthdate for that employee and tries to fix it, "the system locks you out and you can't go any further. My staff tries to call SHOP and will be on the phone for an hour to 2 hours for someone to unlock it." In addition, the SHOP plans seem to be "bifurcated," with many of the plans including only about half the state's health systems in their network, "so there's a good chance you may lose your physician," he added.

Sabrina Corlette, JD, senior research fellow at Georgetown University here, said that in theory, the SHOP exchanges could provide small employers with insurance options that their employees wouldn't otherwise get. However, there have been several problems.

"The information technology systems for SHOP been nonfunctional in many states, and that's a barrier," Corlette said. "Also, most small employers purchase coverage through a broker, and what we've heard from most brokers is that the time and effort it takes to enroll somebody through SHOP is not worth it to them because their commission is same whether enroll [outside SHOP] or through SHOP."

She noted that the ACA includes a tax credit for businesses with 25 or fewer employees that use SHOP. "We have heard that the tax credit they get is not worth time and effort to apply for it, and it's not enough incentive for employers to enroll through SHOP. I think maybe if we make the tax credit easier to apply for and get, that might make it an easier option for employers."

There are other problems with buying insurance under the ACA, said James Scott, founder of Applied Policy, a health policy consulting firm in Alexandria, Va. Scott said his employees range in age from their 20s to their 50s, and before the ACA, prices were standardized so that although the prices were different depending on whether people picked a low-, medium-, or high-option plan, the price for each option did not vary from person to person.

"So I could tell everybody, 'You have $300; shop for a plan and that amount pays the full cost of HMO option. If you want more than that we'll withhold the additional from your check, and you can get a more expensive plan option,'" he said.

"But now plans are a different price for every individual. On the low end, premiums are still about $300, but on upper end they're closer to $500 ... for the subsidy amount," Scott continued. "But in order to keep my promise to employees [that they will] have access to a zero-premium plan, now I need to give them all a different subsidy to start with so they actually have access to a zero-premium plan."

Corlette noted that age rating has long been a part of insurance underwriting for small groups, "but the difference for small employers is that it is now transparent to them. Before that they were aggregated."

Kelly Conklin, owner of Foley Waite, a small cabinet-making company in Kenilworth, N.J., agreed that the age rating came as a shock, but for his firm, "the bottom line is that our premiums didn't increase significantly as a result."

The hearing also looked at what to do about the small group market overall. "The government has tried many things to fix the [small group] market but I think there is a consensus is those efforts haven't gotten us over the finish line," said subcommittee chair Sen. Mike Enzi (R-Wyo.) in his opening remarks. "We should try to ask the question of what this market should look like in the future and what we need to do to get there."

Scott, who noted that his company's premiums have risen sharply since the ACA was enacted, said, "We would like less help from the government. When the government enacts new programs ... it usually means a lot of bureaucratic requirements and risks and stern letters."

"Also, government-run programs seem slow to change ... Frankly we think we are able to do better on our own being able to shop for health insurance coverage. Under the current system we'd like more predictability in what we're getting and not see double-digit increases every year."

Conklin said any changes that are made should keep the ACA's basic protections in place. "I think there are pieces here that would allow us over time and with careful adjustment to do all kinds of imaginative things to broaden small group market ... but those fundamental consumer protections built into the act must remain in place; they can't be compromised. I'm sitting here deathly afraid that Congress will get their hands on this and just rip it to pieces. That's not something I can tolerate."

Subcommittee member Sen. Bernie Sanders (I-Vt.) addressed a broader health reform issue -- "how it happens that the United States of America ... is in fact the only major country on earth that doesn't guarantee healthcare to all people as a right. If we did that, lot of aspects of this discussion might not be taking place."

"The best thing we can do for small and medium-sized businesses is take the burden of healthcare off their backs" by instituting a Medicare-for-all-type single-payer system, he said.
