Riding the Ups and Downs of the Small-Business Obamacare Market
Smaller employers have been wading into the big Obamacare marketplace set up to sell health insurance to workers at small businesses.
But a month into the launch of the federal SHOP exchanges, small-business owners report mixed results with the program—a key part of President Barack Obama's health-care overhaul that's intended to insure more Americans, regardless of the size of their employers.
The exchanges "required me to have a lot of data that we don't routinely collect," said Harold Jackson, who runs medical equipment supplier Buffalo Supply in Lafayette, Colorado. The SHOP exchanges—short for the Small Business Health Options Program—are run by the federal government and available in 33 states.
Detailed data on how small employers are taking to the federally run SHOP exchanges in the 33 states are not yet available. However, a Government Accountability Office report released last month—on additional state-run exchanges—offers some clues. About 2 million people were projected to enroll in 2015, But as of last summer, only 76,000 individuals working for 12,000 small employers had enrolled on state-run SHOP exchanges.
The numbers for now suggest interest and incentives just aren't there for small employers to use these exchanges, says Yevgeniy Feyman, a Manhattan Institute fellow and deputy director of the Center for Medical Progress.
But Katie Hill, a spokeswoman for the Department of Health and Human Services, said, "The SHOP marketplace is performing well, call volume is up at our SHOP call center, and consumers are getting into the system and shopping for coverage.
"We expected to experience the normal issues that any complicated technology does upon launch and have seen only a small number so far. And we will continue to work everyday to make the consumer experience simpler and more intuitive," said Hill in an email to CNBC.
Little incentive for small employers
The SHOP exchanges were put in place under Obama's Affordable Care Act to make it easier for America's smallest employers to offer their workers health insurance. SHOP was designed for employers with fewer than than 50 employees, which is less than the number of employees needed to meet the broader ACA mandate.
SHOP contrasts with broader ACA guidelines, which require larger small employers, with 100 or more full-time equivalent workers, to offer their workers coverage in 2015 or face fines of $2,000 per worker per year for failing to comply. In 2016, those with at least 50 or more full-time workers will fall under that same mandate.
In addition to the 33 federally operated state SHOP exchanges, 17 states and the District of Columbia have set up their own versions of the platforms.
Experts say the biggest speed bump with the health exchanges is that there's little incentive for small employers to use it.
There is a tax credit, which applies for those employers like accountant Jeff Valet of Valet Accounting and Tax Service in Logan, West Virginia. Valet has seven employees including himself, all of whom make an average of $50,000 a year or less. And because he is offering them health coverage, Valet will pocket up to 50 percent of the premiums he pays for health insurance.
But the tax credit is very specific. It applies to small businesses with under 25 workers, making an average of $50,000 or less a year, and can give them up to half of what they pay in premiums back in 2014.
"The small-business tax credit is a small carrot," Feyman said of the Center for Medical Progress.
Valet enrolled his workers on the federally operated West Virginia exchange, and said his experience wasn't without hiccups. He says enrollment for his employees took nearly 10 hours, and that each worker had to go in individually to confirm their enrollment status. Valet worked with a local broker, but said there's a general lack of guidance for small employers who want to sign up on the exchange.
"There's really nothing out there that says, 'Do this, and do that,'" Valet said. "It was pretty much trial and error. If one letter or number wasn't correct, an initial was there that shouldn't have been, we were kicked out and prevented from getting everything into the system."
But in the end, the tax credit Valet will receive will make the online headache worth the efforts.
Desire for health coverage despite obstacles
But other business owners have been less successful enrolling in the exchanges.
Jackson, the medical equipment supplier in Colorado, said he tried to enroll on Colorado's state-run health exchange called Connect for Health Colorado. Jackson needed nitty-gritty details like his worker's dependents' Social Security numbers to move forward in the online health platform.
"Once I got it all finished and attempted to get a quote, I couldn't get it to work," he said.
Jackson eventually turned to a broker, who said, " 'I can get you a quote, but I don't want to go through the exchange, they're too much hassle,'" according to Jackson. He eventually chose to bypass the SHOP exchange altogether and outsourced his health coverage needs to third party that was able to secure more affordable group rates.
That being said, both Jackson and Valet—the West Virginia accountant—wanted to make health coverage to their workers a priority, as they always have.
"It's an important part of our culture and important for attracting and maintaining the best employees," said Jackson of Buffalo Supply.