Choice of health plans to be delayed for small employers
The new health-care law calls for a new insurance marketplace specifically for small businesses, starting next year. But the Obama administration is delaying that part of the program until 2015. Washington state will offer a choice, however.
The New York Times
WASHINGTON — Unable to meet tight deadlines in the new health-care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees — a major selling point for the legislation.
The law calls for a new insurance marketplace specifically for small businesses, starting next year. But in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans.
They will instead be limited to a single plan.
This choice option, already available to many big businesses, was supposed to become available to small employers next January. But administration officials said they would delay it to 2015 in the 33 states where the federal government will be running insurance markets known as exchanges.
And they will delay the requirement for other states as well.
The promise of affordable health insurance for small businesses was portrayed as a major advantage of the new health-care law, mentioned often by White House officials and Democratic leaders in Congress as they fought opponents of the legislation.
The administration cited “operational challenges” as a reason for the delay. As a result, it said, most small employers buying insurance through an exchange will offer just a single health plan to their workers next year.
Health-insurance availability and cost are huge concerns for small businesses. They have less bargaining power than large companies and generally pay higher prices for insurance, if they can afford it at all.
The 2010 law stipulates that each state will have a Small Business Health Options Program, or SHOP exchange, to help employers compare health plans and enroll their employees.
One of the most important tasks of the exchange is to simplify the collection and payment of monthly premiums. An employer can pay a lump sum to the exchange, which will then distribute the money to each insurance company covering its employees.
The Obama administration told employers in 2011 that the small-business exchange would “enable you to offer your employees a choice of qualified health plans from several insurers, much as large employers can.”
In addition, it said, the exchange would “consolidate billing so you can offer workers a choice without the hassle of contracting with multiple insurers.”
Exchanges are scheduled to start enrolling people on Oct. 1, for coverage that begins in January. However, the administration said the government and insurers needed “additional time to prepare for an employee choice model” of the type envisioned in the law signed three years ago by Obama.
In recent weeks, insurance companies urged the administration to delay the “employee choice” option.
“Experience with Massachusetts has demonstrated that employee-choice models are extremely cumbersome to establish and operate,” Aetna said in a letter to the administration in December.
Insurers said the administration was partly responsible for the delay because it did not provide detailed guidance or final rules for the small-business exchange until last month.
Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.
A few states running their own exchanges, including Washington, California and Connecticut, said they planned to offer an “employee choice” option next year, though it was not required.