Louisiana is one of 18 states where small businesses will be allowed to offer only one health plan to workers in 2015 under the Affordable Care Act’s Small Business Health Options Program marketplace, known as SHOP.
The SHOP online insurance marketplaces were supposed to offer a variety of options for group coverage to workers of companies that employ 50 people or less.
Coverage through those plans was supposed to be available in 2015. But the U.S. Department of Health and Human Services’ delay means those choices won’t be available in Louisiana until 2016.
“We were disappointed to see the delay in increased offerings, such as employee choice,” said Kevin Kuhlman, a spokesman for the National Federation of Independent Business. “What it shows us is small businesses are low on the Obamacare implementation priority list, and SHOP exchanges are just kind of an afterthought at this point and time.”
In a May 29 letter to DHHS, Louisiana Insurance Commissioner Jim Donelon recommended delaying the SHOP transition.
Implementing the employee choice model in 2015 would have increased insurance rates by anywhere from 2 percent to 7 percent on top of what was already expected, Donelon said.
The main reason for the additional increase is what is called adverse selection, said state Deputy Commissioner Korey Harvey. People with health issues or who plan elective procedures tend to buy policies with richer benefits, and insurance companies raise rates to cover the increased utilization.
The rates on the exchange are tied to those that are sold off the exchange. So if the rates increase on the exchange, the rates must also rise for off-exchange policies.
Harvey said Louisiana will be able to use the additional year to learn from states that are implementing employee choice on their own exchanges.
“It’s a convoluted system. But, ultimately, we’ll at least have a good idea from viewing other states of what to expect a year after next,” Harvey said.
The Commonwealth Fund, a nonprofit think tank that promotes health care, has said allowing people to enroll in plans that don’t meet the federal marketplace’s minimum requirements will hurt demand on the SHOP marketplace. The practice may also increase premiums for small-group policies that meet the Affordable Care Act’s coverage requirements.
Follow Ted Griggs on Twitter, @tedgriggsbr