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Small Business Exchanges Find Few Customers So Far, Study Shows

By John Reichard, CQ HealthBeat Editor

November 13, 2014 -- Only 76,000 people working for 12,000 small employers were covered through plans offered by the health law’s small business exchanges as of June, the Government Accountability Office reported Thursday.

That figure—reflecting 18 state-based small business exchanges—is vastly lower than Congressional Budget Office projections, said House Small Business Committee Chairman Sam Graves, R-Mo.

The Congressional Budget Office estimated that 2 million employees would enroll in so-called SHOP coverage this year, Graves said in a press release. The health law requires each state to have a Small Business Health Options Program (SHOP) that is administered either by the state or through the federal government.

The Obama administration still hasn’t released enrollment numbers for the “federally facilitated” SHOP exchanges it runs in 33 states. It says, however, that they are comparable to the numbers for SHOPs created on their own by 17 states and the District of Columbia.

The low enrollment figure gives Republicans another opening to attack the health law as they prepare for the next session of Congress and a new series of attacks on the overhaul.

“Obamacare’s SHOPs have been fraught with errors and high costs from the beginning,” Graves said.

GAO detailed the slower-than-scheduled startup of the SHOPs and the features they offer.

The exchanges were supposed to open in all states by Oct. 1, 2013. In all but four states, SHOPs were accepting enrollment applications by that date but important promised features were typically not ready, including online enrollment, and “employee choice” features.

Though insurer competition in the SHOPs was supposed to drive down premiums, the GAO found prices comparable to coverage outside of the exchanges.

The typical small business owner that provides coverage also picks the plan. The idea of SHOPs, in part, is to give their employees a menu of coverage options to choose from. Many state-created SHOPs offer this feature, but none of the federally facilitated ones do, GAO found.

The same is true of online enrollment, which exists in most of the state-run SHOPs but not at all in the exchanges operated by the federal government, the report said.

What small business owners have gained, however, is the ability to see plan information such as premiums and benefits online on web sites in all of the states.

And federal officials are preparing to implement online enrollment for federally run SHOPs for 2015, GAO said. Employee choice will be available next year in 14 states with SHOPs operated by the federal government, though 18 states took up a government offer to delay that feature until 2016.

Enrollment figures for the federally run SHOPs will be made public early next year.

Most bosses are offering their workers a menu of coverage options in states where the option is available, the study found. “Exchange officials in Kentucky and Rhode Island said that approximately 65 and 61 percent of enrolled employers, respectively, decided to offer their employees a choice of plans,” GAO said.

The added features will bring many more customers to the SHOPs, exchange backers say. So too will more aggressive marketing, closer coordination with insurance agents and the fact that employers after 2016 won’t be able to renew coverage that doesn’t comply with the health law, which will make them more likely to start shopping at the small business exchanges.

Others predict the SHOPs won’t be a big draw because the tax credits they offer small businesses end after this year. The exchanges may not be able to charge lower premiums.

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