By Timothy Stoltzfus Jost, J.D., Robert L. Willett Family Professor of Law, Washington and Lee University School of Law
Many small employers—which make up the vast majority of American businesses—struggle to afford and manage health insurance for their employees. They pay higher insurance premiums and have much less bargaining power with insurers than larger businesses. The Affordable Care Act’s Small Business Health Options Program (SHOP) was designed to address this problem by creating state-based insurance marketplaces, or exchanges, for small employers. The SHOP exchanges, set to open in January 2014, will make it easier for small employers to offer an array of comprehensive, affordable plans to their workers.
In an overview of a Commonwealth Fund–supported cluster of articles in the February 2012 issue of Health Affairs, I point out that, to be successful, the SHOP exchanges will have to provide small employers with a more attractive alternative to the options currently available; keep costs affordable; facilitate employee choice; and limit the burden posed by the insurance process by performing administrative functions, and managing enrollment periods. Perhaps most important, exchanges will need to protect against adverse selection, which would lead to a disproportionate number of individuals with health problems enrolling.
The health reform law grants states considerable flexibility in designing their SHOP exchanges, and this new collection of articles provides critical information to state policymakers as they examine their options. The articles offer perspectives and policy suggestions from:
- Terry Gardiner, vice president for policy with the Small Business Majority and former Alaska state legislator, who says small business owners need an exchange that will fulfill many of the functions served by the human resources departments of larger businesses;
- Jon Kingsdale, founding director of the Massachusetts Connector exchange, who emphasizes importance of the business case for SHOP exchanges, noting that exchanges will need to be affordable, attract high-value plans, and offer a wide choice of plans;
- Frederic Blavin, research associate at the Urban Institute’s Health Policy Center, who modeled the effects of exchange design choices on coverage and cost, and estimates that they will cover nearly 10 million employees;
- William Kramer, executive director for national health policy for the Pacific Business Group on Health, who weighs large employers’ potential interest in exchanges;
- Christine Eibner and colleagues at RAND, who examine how the law will affect self-insured plans and grandfathered plans in existence prior to enactment of the Affordable Care Act; and
- Mark Hall, professor at Wake Forest University School of Law, who addresses what measures states might take if the trend toward self-insurance leads to adverse selection in the exchanges.
For more on these issues, join a Commonwealth Fund webinar cosponsored by the Small Business Majority and the National Business Coalition on Health on February 22 at 1 p.m., E.S.T. To register, go to https://cc.readytalk.com/r/p7hevb1x6pdb.