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Small Businesses Find Lower-Cost Health Coverage Via SHOP Exchanges

Health Care Reform and Policy
by Cabe Chadick
Small Businesses Find Lower-Cost Health Coverage Via SHOP Exchanges
Small Businesses Find Lower-Cost Health Coverage Via SHOP Exchanges

In 2015, small businesses with at least 50 full-time employees will be required to provide health insurance options to those workers, while companies with fewer employees will continue to be exempt. However, it seems that those who would qualify for the government's health insurance exchanges designed specifically for such firms would probably end up saving considerably.

Before the 2014 open enrollment period began, small businesses really only had the option of buying health insurance coverage for their employees through private sources, though there was some wiggle room with other types of sign-up for government-run exchanges, according to a report from the New York Times. But, with the online SHOP exchanges set to open in the next few months, it seems that the new choices companies get to make in this regard will not only give them more choice, but also potentially save them a lot of money.

Recent data suggests that small business plans offered on the SHOP exchanges in 26 states studied offered an average savings of 7 percent versus those from private exchanges, the report said. As such, given the size of the plans these companies usually buy, and the cost they take on to do so, even reducing costs in the single digits could go a long way toward improving a bottom line.

There may be several reasons
What's interesting about this, however, is that researchers have not been able to figure out why that is the case so far, the report said. Closer examination could show that plans on SHOP exchanges offer narrower choices than those available privately, which would mean reduced costs but also potentially less beneficial policies - with fewer benefits - overall. It's also possible that the additional transparency that comes with getting onto the exchanges could simply bring the cost down in other ways.

Moreover, it should also be noted that SHOP exchange enrollment has, to this point, been extremely low, the report said. Part of the reason for that, the Obama administration says, is that companies have only had the option of signing up via a paper application, or through a broker or insurance company directly. The ability to sign up online does not yet exist.

Health insurance issuers might therefore have to do more to make themselves stand out from the crowd when the online portion of SHOP exchanges is rolled out in the next few months. This extra effort could go a long way toward boosting enrollment numbers.



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