What Would Success Look Like for Exchange’s Small Business Program?

It may not be as ambitious or high-stakes as the state exchange’s individual insurance market, but health officials are putting a lot of stock in a second health benefit exchange — one exclusively for small-business owners.

The Small-Business Health Options Program — or SHOP exchange — got a boost from a recent Web redesign that allows employers to sign up for coverage online.

That development is in stark contrast to the recent federal announcement that it would delay for a year similar Web capability on the national level.

In California, about 1,500 small-business owners have set up an account since Covered California opened in October. Not all of those employers will necessarily sign up for coverage through the exchange, said Peter Lee, executive director of Covered California. But the fact that interest is running that high now is heartening, he said.

“The SHOP exchange is transformative for small businesses by giving them a way to compete with larger employers,” Lee said.

Small-Business Exchange Differences

The SHOP exchange functions differently from the individual-market exchange. For one thing, it doesn’t have the open enrollment period of the individual market.

“We should not confuse open enrollment with the SHOP exchange,” said Sam Smith, president of the California Association of Health Underwriters. “SHOP will enroll all throughout the year.”

And the other big difference, Smith said: “The products offered in SHOP are not the same products as in the individual market,” Smith said. “They will be offering the tiers of benefits. It’s a standard benefit design.”

With benefit standardization, he said, “every one of the SHOP products have the same coinsurance, the same deductibles between plans, so people can more easily make a choice between plans.”

One of the big selling points of a small-business exchange is that employers can set the level of employer participation, and yet still give employees their pick of health insurance networks, Lee said.

“This provides small business owners with a chance to give their employees a choice of health plans,” he said.

The biggest difference between Covered California’s SHOP and individual market offerings, according to John Arensmeyer, CEO of the Small Business Majority, is the way people will sign up for coverage.

SHOP Exchange Facilitated by Brokers

Arensmeyer said that, in the SHOP exchange, most transactions likely will be completed with an insurance broker.

“We talk to people all across California, and the vast majority of business owners want to work with a broker,” he said. “They’re busy, and this is a new process. We’re happy people are going to be able to do this easily and at no extra cost.”

The new web capability of being able to sign up for SHOP coverage online is important as a tool for employers, employees and brokers to use, Smith said.

“What we’re seeing with our agents across the state,” Smith said, “is that virtually every employer we see is aware of Covered California. But this is really just another platform for employers and agents to use.”

Once the tier of benefits is chosen, the health networks can be chosen by employees, by accessing the employer’s account with the exchange.

“We can explain all of this [to employees] and then employees can access it online and choose their plan,” Smith said. “It’s a much more efficient way to do business, and it’s available for the first time.”

All of that makes perfect sense to Lee. “SHOP is going to be supported by thousands of licensed agents,” Lee said.

As of the end of November, Lee said, about 7,700 agents have been certified by the exchange, “and another 11,000 are in the process of being certified.” And those brokers will be a big part of the exchange’s outreach to the Latino community, he said.

“If you look at the [roughly] 20,000 brokers, about 20% of them speak Spanish. These are people who will be able to influence and educate the community they’re a part of,” Lee said. “They’re going to be vital to reaching the Latino population.”

Enrollment Goals for SHOP Exchange

Lee said he’s delighted to see the 1,500 employers who have started to explore signing up for exchange coverage. Given that most of the media and outreach efforts have targeted the individual market and not SHOP, 1,500 sign-ups is a good first step toward the exchange’s goals, Lee said.

“Our current forecast is that, by end of 2014, about 7,000 would enroll in SHOP,” Lee said. “That’s a lot of small businesses. But it’s still not a large majority of all small businesses.”

And that means it’s attainable, Lee said. The real goal, he added, is not necessarily to reach certain exchange coverage numbers, but rather to sign up as many Californians as possible for any kind of coverage.

“The goal is to get coverage for all Californians,” he said.

It’s obviously too early to gauge whether or not the SHOP exchange will flourish, Lee said, but that measures of success should come into focus in the spring.

“Small businesses buy a month out [from coverage needs],” Lee said. “As for how many will shop, how many will compare and eventually buy into the SHOP exchange, we’ll know more in February or March or April. As their insurance needs to be renewed and reviewed, they’ll look around and see, does the shop exchange make sense for them. That’s when we’ll see.”

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