Archive

Posts Tagged ‘Small Business Health Options Program’

Bill Clinton criticizes ACA gaps

October 5th, 2016 Comments off

At a campaign event for his wife in Flint, Mich., Bill Clinton had praised the law for insuring millions of Americans, but noted that many middle-class Americans were still unable to afford coverage and talked up his wife’s plan to allow those close to retirement age to buy into Medicare.

“The people who are getting killed on this deal are small business people and individuals who make just a little too much to get any of these subsidies because they’re not organized,” he said. “They don’t have any bargaining power with insurance companies so they’re getting whacked.

“So you’ve got this crazy system where all of a sudden 25 million more people have health care and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.

Source: Bill Clinton’s Obamacare remarks put Hillary on the hot seat

The former president’s talking about shortcomings in the Patient Protection and Affordable Care Act relative to making health coverage more accessible and affordable for individuals and small employers. Regarding the former, I’ve referred to them as the “401 percenters” — those who exceed the household income cutoff of 400 percent of federal poverty for advance premium tax credits for individual qualified heath plans sold on state health benefit exchanges. There have been numerous accounts that even those with household incomes between 300 and 400 percent of federal poverty levels get too little in the way of subsidies to make coverage affordable or even worthwhile, federal income tax penalties for going bare notwithstanding.

As for Bill Clinton’s reference to small business, the Affordable Care Act envisioned small businesses organizing to gain some degree of bargaining power in the health benefit exchange’s Small Business Health Options Program known as SHOP. In theory, the SHOP was to enable small business to aggregate their market power, aided by the law’s creation of a single statewide risk pool for the small group market segment. In reality, it didn’t work out that way. SHOP turned out to be a flop, with little interest among small employers and insurance brokers in participating in the program.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Hawaii, Vermont seek ACA Section 1332 waiver of small business (SHOP) exchange requirement

February 19th, 2016 Comments off

Hawaii, which decades ago expanded access to health insurance by requiring employers to offer coverage to most workers, hopes to use its 1332 request to harmonize the ACA’s small business insurance rules with the state’s own, often more stringent standards, including by waiving the requirement to maintain a Small Business Health Options Program (SHOP) exchange. Similarly, Vermont is requesting to waive the ACA’s requirement to establish an online SHOP exchange, seeking instead to allow small employers to continue to purchase qualified health plans directly from insurers.

Source: Innovation Waivers and the ACA: As Federal Officials Flesh Out Key Requirements for Modifying the Health Law, States Tread Slowly – The Commonwealth Fund

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Arkansas State Health Exchange Paused by Governor

September 25th, 2015 Comments off

LITTLE ROCK, Ark. — During an afternoon meeting at the capitol Thursday, Governor Asa Hutchinson — explaining why he’s pushing pause on a key tenant of health care reform in the state. Under the Private Option, passed in 2013, Arkansas received a $90 million federal grant to establish a state based, online health insurance marketplace where individuals can shop and compare plans.

“We’re not as a state convinced that’s going to be needed in the direction that we go,” Hutchinson said.

The state is currently using a federal version of the exchange through which 62,000 Arkansans are getting coverage.

“There’s less risk going with the exchange that we know rather than an exchange we don’t know,” he said.

Still, the governor says the state will continue working on an online marketplace for businesses which set to be functional next year.

Source: Arkansas State Health Exchange Paused by Governor

Arkansas’s move would put the state in a category with Utah. Utah operates its own Small Business Health Options Program, Avenue H, with the federal government operating the state’s exchange for individual health plans.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA small group market changes for 2016 could potentially benefit SHOP

May 1st, 2015 Comments off

The Patient Protection and Affordable Care Act holds two significant changes for the small group market taking effect for plan year 2016:

  • A mandatory definition of “small employer” as those employers with 100 or fewer full time equivalent (FTE) employees. Section 1304(b)(3) of the Affordable Care Act afforded states the option – which all exercised – to set the metric at 50 or fewer employees for plan years 2014 and 2015.
  • The delayed phase in under 2014 federal transition relief guidance of the large employer shared responsibility mandate. Under the guidance, the requirement that employers offer most employees health coverage meeting minimum benefit and affordability standards encompasses employers with 50-99 FTE employees starting in 2016.

Both alter the post-Affordable Care Act landscape of the small group market starting next year by expanding its parameters and providing greater incentive for small employers to offer health coverage. What remains to be seen is whether they will operate to expand small employer participation in the Small Business Health Options Program (SHOP) that all state health benefit exchanges must have in place unless they opt to combine their individual and small group exchanges as authorized by ACA Section 1311(b)(2). SHOP enrollment has been very weak in nearly all states relative to small group market as a whole.

A larger and more compulsory small group market could potentially boost SHOP’s prospects. But it won’t address the lack of strong economic inventive for small employers and their brokers to engage with the SHOP. The SHOP is predicated on pooling the purchasing power of small employers to drive down premiums that many small employers perceive as unaffordable. Gaining that purchasing clout with small group health plan issuers requires SHOPs first bring a lot more covered lives to the bargaining table – the classic chicken and egg conundrum.

Meanwhile, 17 business groups and the National Association of Health Underwriters have asked the U.S. Department of Health and Human Services in a February 18, 2015 letter to postpone implementation the 2016 mandatory definition of small employer to 100 or less employees to 2018, warning it would produce market disruption among health insurers that could limit employer coverage options as well as potentially lead to premium increases.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Business groups, broker association urge 2-year delay in expansion of small group market starting in 2016

March 20th, 2015 Comments off

Seventeen business groups and the National Association of Health Underwriters have requested the U.S. Department of Health and Human Services delay implementation of a Patient Protection and Affordable Care Act provision requiring states to expand the small group health insurance market starting next year.

Section 1304(b)(2) of the law defines the small group market as employers who employed at least 1 but not more than 100 employees on business days in the previous calendar year. Section 1304(b)(3) allows states to temporarily define the small group market as 50 or fewer employees for plan years starting before January 1, 2016.

In a February 18, 2015 letter to HHS Secretary Sylvia Burwell, the signatories urge extending that date to January 1, 2018. Doing so would allow organizations employing 51 to 100 employees to continue to purchase company rated coverage not compliant with Affordable Care Act requirements for small group coverage including modified community-based rating based on a single statewide risk pool, specified essential health benefits and standards for minimum actuarial value and affordability for participating employees. They warn broadening the scope of the small group market will lead to market disruption among health insurers that could limit employer coverage options as well as potentially lead to premium increases. The signatories cite an Oliver Wyman study finding that two thirds of employers affected by the expansion would see premiums rise by an average of 18 percent in 2016. That could lead some employers to choose to self-insure, reducing the size of the risk pool and putting additional upward pressure on premiums, they contend. The implication is employers with 50 or fewer workers tend to employ less healthy staff with higher medical utilization than firms with 51 to 100 employees, degrading the quality of the risk pool if all employers of 100 or fewer employees were forced to jointly pool their risk.

In an issue brief examining the effect of the expansion of the small group market, the American Academy of Actuaries concluded premiums could increase for some employers – such as those employing relatively younger, healthier workforces – and conversely decline for those with less healthy staff members. The brief noted that since there are more than twice as many covered employees in the 1-50 employee group size cohort than in the 51-100 category, the impact on premium rates would be moderated.

John Arensmeyer, founder and CEO of Small Business Majority, opposes the requested delay that would continue to segment off the smallest employers given no states have opted thus far to define their small group markets as employers with up to 100 employees. Businesses with fewer than 50 employees would benefit from the increased spread of risk of more covered lives by having larger employers in the small group market, Arensmeyer wrote in a March 5, 2015 blog post. “The entire pool becomes bigger,” he observed.

That larger pool, Arensmeyer wrote, would help boost the struggling Small Business Health Options Program (SHOP) of the state health benefit exchange marketplace and benefit brokers. “We’ll also see more broker involvement in SHOP as firms of this size are more likely to utilize the help of agents,” Arensmeyer added.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Utah: Medicaid expansion would save large employer penalties, use SHOP exchange for individual plans

December 11th, 2014 Comments off

Approval of its proposed Healthy Utah Medicaid expansion program would allow large employers of low wage workers avoid penalties when those workers enroll in subsidized individual health plans though the state’s health benefit exchange, according to a document describing the program. The proposed 3-year pilot program is pending approval of a Section 1115 waiver of Medicaid rules from the U.S Department of Health and Human Services.

Utah is served by a federally facilitated exchange (FFE) in the individual market and operates a state-based exchange (SBE) serving small employers of 1 to 50 employees under the Small Business Health Options Program (SHOP) of the federal Patient Protection and Affordable Care Act. A notable component of Utah’s proposed Medicaid expansion program is those in the expansion population would receive federal Medicaid share funding to purchase commercial plans sold via the state’s small business exchange, Avenue H, and not the FFE, healthcare.gov. Those earning more than 100 percent of federal poverty levels (FPL) are eligible to purchase coverage in the FFE.

“Beginning in 2016, large businesses in Utah will likely face $11 to $17 million less in tax penalties each year if their employees making between 101 percent and 133 percent FPL are enrolled in a state-sponsored program rather than a Health Insurance Marketplace plan with a tax credit,” the document states. Employers of 50 or more full-time employees must offer health insurance to 95 percent of their workforces starting in 2016.

In addition, children who currently receive Medicaid would have the option to enroll in the same commercial plan their parents select through Avenue H. “Medicaid would continue to provide cost sharing and wrap-around coverage for these children to ensure they continue to receive the same level of coverage they do today,” the Healthy Utah plan states. “It is hoped that having a single primary health plan for the family will simplify coverage for the family. The federal government has previously denied Utah’s requests to use Medicaid funding to purchase these private plans. However, through the Healthy Utah negotiations, Utah was able to obtain approval for this type of assistance.”

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

SHOPs unlikely to stem erosion of small group health coverage

November 9th, 2014 Comments off

To restore functionality to the troubled individual health insurance market, the Patient Protection and Affordable Care Act operates to force sellers and buyers together. On the sell side, it does so by requiring individual health plan issuers to accept all applicants without medical underwriting. On the buy side, it creates incentive for people not covered by employer-sponsored or government plans to sign up for coverage or pay a tax penalty. In addition, advance tax credit premium subsidies are available to those with low and moderate incomes.

The small group health insurance market segment — coverage sold to small employers – lacks this mix of sticks and carrots. The sole incentive is for small employers with 25 or fewer low wage employees, who can receive tax credits if they offer coverage to their employees and pay at least half the premium. The credits are available for 2014-16 and for plans purchased through the Small Business Health Options Program (SHOP) of the state health benefit exchange marketplace.

SHOPs are grounded in the Affordable Care Act’s philosophical underpinnings that recognize most working age Americans obtain health coverage though their employers. Rather than incentives, the idea behind the SHOPs is to strengthen the small group market by pooling the buying power of small employers. The SHOPs are designed to act like a small employer health insurance purchasing cooperative, giving small employers collective negotiating leverage with health plans, thus in theory helping to drive down premiums and making small group coverage more affordable to even the smallest employers.

As The New York Times reports, however, multiple stumbling blocks impede the rollout of the SHOPs that may ultimately make it impossible for them to build critical mass and achieve the pooled purchasing power they were intended to provide:

Experts say it remains an open question whether the program, known as SHOP for Small-Business Health Options Program, will eventually work. “I think it will take a number of years, if it succeeds,” said Jon Gabel, a policy expert at NORC at the University of Chicago. There remains strong opposition from brokers and some insurers, he said, who view it as a threat to their existing business.

That is leading to the classic chicken and egg problem. If too few small employers opt for SHOP coverage, they will have little buying clout with health plan issuers and thus SHOPs won’t be able to help hold down premium rates. That will encourage more small employers to stop offering coverage to their employees on the grounds that it’s not affordable, which in turn reduces the potential market of the SHOPs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Floor of small group market may be rising

November 3rd, 2014 Comments off

The small group market may be undergoing a redefinition. Section 1304(b(2) of the Patient Protection and Affordable Care Act defines small employers as those having between 1 and 100 employees. (Through 2015, states have the option to set the upper limit at 50 employees.)

The marketplace could be raising the single employee floor on a de facto basis, according to this Bloomberg story reporting those working for small employers are increasingly purchasing individual coverage though state health benefit exchanges. The shift is accelerating among the smallest employers, Ana Gupte, an analyst at Leerink Partners LLC, told Bloomberg, adding it’s “happening faster than expected.”

The implication is the low end of the small group market – generally defined as organizations with fewer than 10-20 employees — is being cannibalized by the individual market, where the incentives for participation are far stronger. That would effectively change the practical definition of the small group market to a range of between 10 or 20 and 100 employees.

How this will affect state small group markets over the next few years remains to be seen. It could adversely impact the small employer side of the state exchanges — the Small Business Health Options Program (SHOP) – by significantly shrinking the pool of small employers that might potentially enroll. That could prompt all but the largest states to exercise their option under Affordable Care Act Section 1311(b)(2) to merge their individual and SHOP exchange functions. States also have the option starting in 2017 to offer large group plans on their exchanges as allowed under Section 1312(f)(2)(B)(i). But with the growth of private exchanges in the large group market, it’s doubtful the public state benefit exchanges would be appealing to large group plans.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Sam’s Club to launch a private health insurance exchange – The Washington Post

October 23rd, 2014 Comments off

The exchange, known as The Aetna Marketplace for Sam’s Club, will be available in 18 states beginning this month to members, their employees and their families. Employers can choose whether to offer a defined contribution plan or one that gives workers a flat, pre-tax contribution to apply toward a plan of their choice.

One of Sam’s Club’s chief rivals, Costco, already offers a private insurance marketplace that is geared at individual shoppers. The Sam’s Club marketplace is different in that it was designed specifically to appeal to small-business owners, although individual members could potentially sign up for it. Sam’s says that some 70 percent of its customers who hold business memberships have five or fewer employees.

via Sam’s Club to launch a private health insurance exchange – The Washington Post.

This collaboration exploits the weak 2013-14 rollout of the Small Business Health Options Program (SHOP) states must operate within their health benefit exchanges as the exchanges prioritized the individual plan side of their operations and outreach efforts.

Private sector marketplaces like this one compete with the SHOP. But the SHOP offers something they cannot: income tax credits for small employers with 25 or fewer employees paid an average of $50,000 or less annually. The credits can be claimed for a 2-year period provided the employer pays at least half of the premium.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Short, long term changes could bode well for small group market

April 6th, 2014 Comments off

The small employer group market will be changing over the short and long term. Both changes could bolster the market segment as well as the Small Employer Health Options Program (SHOP) within the state health benefit exchange marketplace, which is seen by some as facing competition from the individual plan exchange marketplace.

Over the immediate short term, small group plans will be able to be sold with higher deductible limits under legislation signed last week by President Barack Obama. Section 213 of H.R. 4302 repeals a provision of the Patient Protection and Affordable Care Act at Section 1302(c)(2) limiting small group plan deductibles to $2,000 for individuals and $4,000 for families. The repeal is effective April 1, 2014 and is available to all plan year 2014 small group plans. The deductible limits presented a challenge to health plan issuers wishing to offer small group plans with bronze metal tier actuarial value that on average pay 60 percent of covered medical services.

The Employers Council on Flexible Compensation (ECFC), which said it joined forces with several other organizations to successfully lobby for the repeal of the provision, said the repeal of the limit will allow small employers to continue to provide affordable medical insurance to their employees, including flexible compensation options such as FSAs, HRAs, and HSAs while enabling employees to set aside tax advantaged dollars to help pay for their health care out-of-pocket and deductible expenses. Click here for the ECFC’s news release.

Over the longer term, the small group market will in all states be uniformly defined as plans sold to employers with up to 100 employees beginning with plan year 2016. For plan years 2014 and 2015, Section 1304(b)(3) of the Affordable Care Act gives states the option to define their small group market as plans sold to employers of 50 or fewer employees.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

%d bloggers like this: