May 16, 2017

How the Trump admin wants to change the ACA's small business exchanges

Daily Briefing

The Trump administration on Monday announced that it plans to propose a new rule that would end online enrollment in the Affordable Care Act's (ACA) Small Business Health Options Program (SHOP) for plan years beginning on or after Jan. 1, 2018.

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SHOP details

Under the ACA, businesses with 50 or fewer employees can qualify for a tax credit of up to 50 percent of their premiums for plans purchased through SHOP. Thirty-three states rely on the federal SHOP exchange, while 17 states and Washington, D.C., operate their own.

However, few small businesses have used the SHOP exchanges, with most businesses instead choosing to purchase health plans through private brokers. According to CMS, fewer than 8,000 of the country's nearly 30 million small businesses enrolled in coverage through the federal SHOP exchange for the 2017 coverage year, covering fewer than 40,000 U.S. residents.

Admin seeks to scale back SHOP

CMS in a release said the agency will propose eliminating online enrollment through the federally run SHOP exchange. Instead, CMS said small business owners would be able to access private coverage via an agent, broker, or directly from an insurer.

CMS said small businesses still would be able to apply for federal tax credits under SHOP. In addition, small business still would use HealthCare.gov to determine whether they are eligible for SHOP, according to the release.

CMS said the proposed changes aim to "reduce the federal government's role in health care coverage decisions and make it easier for issuers to use their own enrollment systems for SHOP plans."

According to the release, the proposed changes would not apply to states that run their own SHOP exchanges. CMS said such exchanges "could continue to operate as they have previously."

Implications

Because few businesses have enrolled in SHOP coverage via the federal exchange, industry experts say the administration's proposal to eliminate online enrollment likely will not have a substantial effect on the small business health insurance market, the Wall Street Journal reports.

Katherine Hempstead, director of health insurance coverage at the Robert Wood Johnson Foundation, said, "Since the response to the SHOP from the small business community has been pretty underwhelming, the affected population is relatively small."

Larry Levitt, a senior vice president at the Kaiser Family Foundation, said, "Scaling back the SHOP exchange won't really make much difference and is more of a symbolic move to chip away at the ACA."

But the advocacy group Small Business Majority in a statement said the change could effectively end SHOP altogether, because small businesses now will have to purchase coverage and determine their eligibility for SHOP via two different sources. "Forcing small employers to make this extra effort just to enroll in SHOP will make it likely that SHOP usage dwindles to little or nothing," the group said, adding, "Unfortunately, this proposal is just one more example of how the … administration would rather undo key parts of the ACA that are good for small businesses."

Former HealthCare.gov CEO Kevin Counihan also said the change could make it more difficult for small businesses to apply for SHOP. "The irony in some of this," he said, is that the administration has "now added more steps in the goal of being simpler" (Hackman, Wall Street Journal, 5/15; CMS release, 5/15; Dickson, Modern Healthcare, 5/15; Frieden, MedPage Today, 5/15; Goldstein, Washington Post, 5/15).

What does the future look like for the health insurance market?

Join us on June 15 for a webconference about how you can prepare for changes in the health insurance sphere.

In this webconference, we will bring you up to date on payer activity, present scenarios which could occur in the future, and suggest preparations you can make for an evolving health landscape.

Register for the Webconference

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