SHOP has long way to go if it is to become a focal point of the small-group market

The Patient Protection and Affordable Care Act (ACA)-created Small Business Health Options Program (SHOP) has the potential to grow, but the program has a long way to go if it is to become a focal point of the small-group market, according to a recent report from The Commonwealth Fund. The report, Talking SHOP: Revisiting the Small-Business Marketplaces in California and Colorado , evaluated the SHOP exchanges in California and Colorado. The analysis found that the relative fortunes of SHOP appear closely tied to the performance of the ACA exchanges for individual coverage. Though the California and Colorado programs are similar in design, The Commonwealth Fund found that California’s has had more success, largely because of its stability and the broad political acceptance of the ACA within the state.

SHOP exchanges.

Currently, 17 states and the District of Columbia operate their own SHOP exchanges, while the remaining SHOPs are run by the federal government (FF-SHOP). Mississippi, New Mexico, and Utah have state-run SHOPs, but their individual marketplaces are federally run. In spring 2017, the federal government reported that SHOP had enrolled 232,698 employees from 27,205 firms. Of this total, over 80 percent were enrolled through state-run SHOP programs.

According to the report, Colorado and California are among the few states that followed the original ACA prescription to change the definition of the small-group marketplace upward to companies with one to 100 employees, from those with one to 50 employees. While the increase was intended to improve the stability of small-group coverage inside and outside the marketplaces, some analysts were concerned it could have the opposite effect. This reflected, in large part, employer worries about the impact of switching to ACA-compliant plans. However, the actual rise in premiums in the statewide small-group marketplace, and in SHOP, have been modest-just over 3 percent in 2016 and 2 percent in 2017 for the market as a whole.


In California, 32,684 enrollees from 4,315 employers were covered as of spring 2017. After a slow start, brokers have been working closely as partners with Covered California, noted The Commonwealth Fund. Over 14,000 brokers serve the individual market, while 2,000 are certified to sell through Covered California for Small Business (CCSB), the state’s SHOP exchange. According to the report, 20 percent of brokers control 55 percent of the CCSB market, while half of all brokers who have done business with CCSB have just one account with the program. A small fraction, perhaps 200 altogether, are responsible for writing the bulk of policies through the program. One policymaker said, “Brokers are at the forefront of the distribution of plans in the individual marketplace, and this has carried over to SHOP.”


In Colorado, political opposition to the ACA remains significant, skepticism among businesses persists, and turnover in the insurance marketplace has created obstacles. The political pressure has stretched the capacity of Connect for Health Colorado (CFHC) and left it with limited options to market SHOP. Although there is support to expand SHOP in theory, competing priorities make this difficult. In practice, the effort to publicize SHOP has been placed on a back burner, the report found.

This, combined with business wariness and lack of knowledge of SHOP, explains why uptake in Colorado has been slow. In October 2014, 2,521 individuals were enrolled. In 2015, enrollment reached 3,314, from 472 businesses. By May 2016, that number had declined to 2,897, but it has rebounded somewhat to reach the current high of 3,753 enrollees from 536 companies.

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