Enrollment For Small Group Health Insurance
State-Run Exchange Expected To Meet Deadlines
Despite Extensions Granted By Obama Administration
By Tiffany L. Rider - Assistant Editor
December 3, 2013 – “Covered California and SHOP is open for business.”
That statement from Peter Lee, executive director of the state-run health insurance exchange known as Covered California, came in response to the Obama Administration’s announcement November 27 of the one-year delay in the launch of the small business self-enrollment component of the federal health care exchange Web portal.
The online enrollment component SHOP – Small Business Health Options Program – is designed to allow small business owners to voluntarily enroll in small group plans with rates negotiated through either a state-run or federally operated exchange.
The Obama Administration is now recommending that small business owners who had planned to enroll through the federal exchange’s online SHOP component work with insurance providers and brokers directly until access is available in November 2014.
This delay adds to the mounting mishaps in the launch of HealthCare.gov, the site through which individuals and small businesses are supposed to be able to access information on and enroll in health plans that adhere to the standards of the Affordable Care Act (ACA).
Despite troubles with the federal platform, Covered California announced November 27 that its SHOP was in place. By creating an account with Covered California, small business owners are able to check eligibility and acquire estimates for group medical plans. Actual enrollment for employers with 50 full-time equivalent (FTE) employees begins in late 2014 for coverage starting in 2015. Employers with up to 100 FTEs may begin enrollment in 2015 for coverage effective 2016.
Blue Shield of California, Health Net, Chinese Community Health Plan, Kaiser Permanente, Western Health Advantage and Sharp Health Plan are all providers offering group medical plans to small businesses through the Covered California SHOP, with tiered pricing modeled after the individual market structure of Covered California. Costs also vary by pricing region, of which there are 19 across the state.
Long Beach resides in Region 16, which includes plans from Blue Shield, Health Net and Kaiser Permanente. Early estimates issued this summer by Covered California indicate that the average cost of the three lowest priced silver tier plans for a 40-year-old employee working in Region 16 would be $309 per month.
Anthem Blue Cross, originally listed as a small group plan provider for Covered California’s SHOP, dropped out in June based on the elimination of the requirement that qualified health plans participating in the individual exchange apply to participate in SHOP. While the provider remains one of two statewide plans participating in the state-run individual marketplace, Anthem Blue Cross will only provide its small group plans outside of the exchange.
“Because the SHOP exchange will not have the same tax advantages (subsidies) for the purchaser as the individual exchange, experts expect less participation in the Small Business exchange when compared to the individual exchange,” according to a statement from Anthem Blue Cross on its SHOP withdrawal.
As small business owners watch what is happening in the individual market, many have or are in the process of renewing their current health insurance plans now to maintain coverage through all of 2014.
“We have heard about insurers trying to give early renewals so their coverage goes through the entire year and at competitive pricing to keep their market share,” Anthony Wright, executive director of Health Access California, told the Business Journal.
Small businesses are not required to purchase group plans through SHOP, though various advocacy groups have speculated that the negotiated prices of SHOP plans may be cheaper than those in the private sector market. However, employers are mandated to pick up 50 percent of the plan cost if purchasing group plans through Covered California SHOP.
According to Wright, one benefit of purchasing through SHOP is that employees are able to choose diffrent plans for different insurers in a more streamlined fashion that would occur in the private sector.
Wright described the launch of SHOP being “a much smaller switch” than launching the individual exchange since the small group medical insurance plans in California’s market already meet many of the standards required by the ACA.
Micah Weinberg, senior policy advisor with the Bay Area Council, told the Business Journal that the small group market in California was working fine before the ACA, whereas the individual market was very broken in terms of guaranteeing coverage regardless of preexisting conditions.
“It really makes sense to roll these changes out over a longer period of time for the smaller group market,” Weinberg said. “The changes in the small employer market are not as drastic. There are some differences in terms of how we charge now based on where they live, based on their age or the number of children in their family.”
What about those small businesses that do not offer small group health insurance coverage?
Tom Benson, owner of Bud’s Beach Cities Auto Upholstery in Signal Hill, is one of those businesses. He had a group plan for several years, subsidizing the cost per employee by $100. Even with the subsidy, Benson said his employees thought the coverage was too expensive. Some were able to get insurance through their spouse, while others lived without it.
Because of the lack of participation in the plan, the insurance company canceled it, Benson said. Living with a heart condition in his early 60s, Benson was hard pressed to find a health insurance provider that would accept him and his preexisting condition for an individual plan.
In October 2012, Benson was finally accepted into California’s Pre-existing Condition Insurance Plan (PCIP), receiving decent coverage for $495 (he had been paying about $900 with group coverage he offered for his business). He also participated in a wellness program, which brought the cost down to $445.
Even when cost for coverage went up to $505, Benson said it was still a good deal. This year, however, he received notice of cancelation on his PCIP and was informed that he would need to purchase insurance through Covered California. With the individual mandate, his seven employees who do not have coverage or are no longer able to receive coverage from their spouse must also get coverage.
“For me, the premium for the platinum PPO plan, which is top of the line, is $700. That is a heck of a deal,” Benson told the Business Journal. “I know I’m going to apply. I know I’m going to carry that coverage. . . . I also know my employees. They are going to panic and ask, ‘What do I need to do?’ They are not motivated at all by compliance. They’re going to come to me with questions and I want to have answers.”
Small businesses pay 18 percent more on average for health care insurance coverage than large businesses do in the U.S., said John Kabateck, executive director of the National Federation of Independent Businesses (NFIB) California division. Based on NFIB polling, soaring health care costs have been the top concern for small businesses for years.
What is needed among small business owners, according to Kabateck, is certainty. Even with the temporary small business health care tax credit (if small businesses are eligible to benefit from it), there remains a lack of stability, he said.
Benson agreed. “The economy has been shaky enough that cutting back hours seems to be logical for many small businesses also. My average employee is down to 32 hours. I work 60 hours,” he said. “If [the market] does not have broad participation, rates could skyrocket. People are operating on faith with very limited information right now.”
“What small business owners need are time and space. Time to get answers and space to prepare for the health care steamroller plowing their way,” Kabateck said. “Let’s give small business owners more hope with their health plans, and the way to do that is to make sure there is trust with our government.”
That trust, he said, has been challenged by the problematic launch of the federal government’s web platform HealthCare.gov as well as President Barack Obama’s repeated public statements that individuals would be able to keep their doctor and keep their health plan being nullified with the rollout of the ACA.
Those factors played into the Obama Administration’s announcement last month that individuals may keep their current health plans for one year. California, which has led the country in implementing the ACA and its launch of the state-run health insurance exchange, opted to move forward as planned with the elimination of existing individual health plans that do not meet the requirements of the ACA – which is what health care insurance providers have been planning to lead up to the launch of the individual exchange in October.
By upholding that deadline, California’s health insurance companies must discontinue plans that don’t meet the basic standards of the ACA. Individuals whose health plans are discontinued may take advantage of an extended deadline – now through December 23 – for enrollment for coverage in 2014.
“I disagree with the decision of Covered California to cancel existing policies set to be renewed for 2014,” Congressman Alan Lowenthal said in an e-mailed statement to the Business Journal. “While I understand the reasoning of Covered CA, canceling policies is unfair to the hundreds of thousands of Californians who believed their insurance companies would continue through 2014. However, I strongly believe that insurance companies should not be abllowed to sell new policies that do not meet the Affordable Care Act’s ten essential benefits.”
The California Association of Health Plans, Health Access California and others have shown support for Covered California’s decision to move forward implementing the new individual plans for 2014.
“Even if we did extend the plan, that wouldn’t prohibit insurers from increasing rates,” Wright said. “There would be no guarantee that individuals wouldn’t see a significant rate increase. Essentially you would get to keep your substandard health plan and also get the rate increase you were trying to avoid.”