SHOP’s operational problems must be addressed for program to be a success

Since the Small Business Health Options Program (SHOP) exchanges opened to enroll eligible employees on October, 1, 2013, the program has been plagued with operational difficulties, and as a result, lower-than-expected enrollment numbers. According to a recent study by the Commonwealth Fund, these operational problems must be addressed before the program can become a success.

Background. The Patient Protection and Affordable Care Act (ACA) created the SHOP exchanges, which allow small businesses to offer coverage to workers at affordable rates. As of October 1, 2013, 33 federally-facilitated SHOPs and 14 of the 18 state-based SHOPs were operational, though not all key features were available. As of May 2015, approximately 10,700 small employers provided coverage to workers through the SHOP exchanges.

California and Colorado. In the study, Lessons from the Small Business Health Options Program: The SHOP Experience in California and Colorado, the Commonwealth Fund examined the SHOP exchanges in the two states to gain an early view of the implementation of the SHOP program. More than 50 SHOP small-business owners were interviewed, along with insurance executives, insurance brokers, consumer advocates, policymakers, and dozens of business owners in both states.

During the implementation process, in both states, the SHOP exchange was secondary to the individual health exchange in terms of staff time and resources. Colorado devoted more time and money than California did to outreach activities, both through its SHOP website and through community meetings, and for the most part, its website for enrolling small groups functioned adequately from the beginning. California’s SHOP portal, on the other hand, proved difficult to use and, in February 2014, was shut down after numerous agents and businesses complained they were unable to complete their applications. Responsibility for the SHOP enrollment process in California was ultimately turned over to a third-party administrator that was already handling sales operations.

Main findings. The study found that virtually everyone agreed that SHOP’s operational problems must be addressed to make the process more comparable to that for purchasing health plans outside the SHOP exchange.

For business owners, employee choice was the most important reason for electing SHOP or considering doing so, followed by ease of administration. Several owners interviewed by the Commonwealth Fund saw SHOP as a viable alternative to the private exchanges that large and midsize employers are now considering.

According to those in the insurer and policy communities, small-business owners were not well informed about available tax credits, although nearly all owners surveyed said they were aware of the credits. However, most business owners reported the tax credits were not key to their decision to elect SHOP.

Most insurers and agents are willing to take a wait-and-see approach toward SHOP’s potential. Carriers, meanwhile, appear to be in it for the long haul, according to the Commonwealth Fund: most of the same insurers renewed for the second year in both California and Colorado.


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