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article imageObamacare’s small business exchange & health coverage options

By Jenna Cyprus     Oct 1, 2014 in Health
Leading up to the healthcare law which was stumbled out almost a year ago, President Obama assured small business owners that it would be simple for employers to shop for and secure healthcare coverage.
Touted as a one stop shopping experience online, it was supposed to be a means to guide small business owners to compare plans and purchase with a simple click. The approach of putting rates in a side by side comparison (while also offering small business tax breaks) was supposed to ultimately lead to more affordable options for business owners.
However, a year later only a few states have an efficient small business exchange. Dubbed “SHOP exchanged,” a number of employers are still purchasing their plans via paper applications. There have been rumors of portals going online in the autumn of 2014, but some states still aren’t ready. The new deadline is early 2015. However, it was the assurance of cheaper health plans that most business owners are interested in exploring.
SHOP Exchanges on course
According to a survey by the University of Chicago’s National Opinion Research Center, today’s health plans for small business owners are cheaper by around seven percent. That’s when comparing plans to those offered in other portals. An example offered by researchers is for a basic “mid-tier plan,” which promises $220 in annual savings when bought via SHOP exchanges. One senior fellow, Jon Gabel, says, “It’s definitely surprising.”
He points out that since an abundance of insurers haven’t shown any interested in selling on SHOP exchanges, “I expected them to price those plans higher than the plans sold off the SHOP, but it didn’t turn out that way; in fact, just the opposite.” Gabel and his crew have been using data from 26 state insurance databases to pull their figures. Of those 26 states, 15 had created their own exchange while 11 opted to use the default marketplace which the federal government offers.
The truth behind lower SHOP exchange rates
Although the researchers were surprised by the results, Gabel says it’s probably due to the foundations on which the exchanges were built. The purpose was to increase insurer competition in that side by side comparison. It looks like rate revisions have indeed taken place after insurance companies have seen the figure their competition is offering. On the other hand, that’s not going to be the only factor for lower rates.
Gabel says that the SHOP exchange plans have a small provider network, which naturally makes them more affordable. However, it also negatively impacts employees of small businesses since they’re limited when they need healthcare. Plus, some of the plans don’t cover benefits that aren’t considered “essential,” leaving business owners and their employees with a bare bones medical coverage that’s not suitable in every situation.
A fair trade?
While there are certainly some potential downsides to SHOP exchange policies, even if the rates are just a little lower it can make a huge impact. So far, SHOP exchanges have largely failed to really get moving in the small business sector. A previous study at the same research center suggested that of the small business owners who aren’t covering their employees’ healthcare, 82 percent said their moves (or lack thereof) are solely because of high prices.
Another 83 percent said that tax credits might shift their decisions, while 90 percent said they preferred to just write one check per month for premium coverage. Both of these options are featured on SHOP exchange markets. Plus, an overwhelming amount said they wanted to comparison shop side by side, which Gabel says suggests an increase in small business shopping and satisfaction should prices remain low.
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