CMS said May 15 it intends to propose rules, taking effect Jan. 1, 2018, that would allow small employers in states with federally facilitated Small Business Health Options Program exchanges under the Affordable Care Act (ACA) to enroll directly with insurers offering SHOP plans or through agents and brokers. Employers would no longer enroll through HealthCare.gov’s portal.
(Separately, CMS said May 17 it is “streamlining” the federal portal’s enrollment process for individual-market exchanges using HealthCare.gov. In the upcoming 2018 open enrollment period, consumers using direct-enrollment partners may complete their applications on the third-party websites without being redirected to the federal portal, as has been done previously.)
The federal portal would continue to determine companies’ eligibility for the Small Business Health Care Tax Credit, but would no longer handle functions such as enrollment and processing premium payments, CMS said. Employers signing up for SHOP coverage this year, which they can do until Nov. 15, would be given a grace period. They could continue using HealthCare.gov in 2018 for enrollment and premium payment, until their current plan year ends and it’s time to renew.
CMS Administrator Seema Verma says the proposed changes will make it easier for small employers to buy affordable coverage for workers and make SHOP exchanges function better.
SHOP Exchanges ‘Never Caught On’
National health policy expert Tim Jost responds in a May 16 Health Affairs blog that it is “far from obvious” why Verma’s expectations would be met under CMS’s proposal. Small employers have always had the option of enrolling directly with insurers for coverage, so this move doesn’t expand employer options, he says.
The bottom line, according to Jost, emeritus professor at Washington and Lee University School of Law, is that CMS’s proposal would effectively end the ACA’s SHOP exchange for small businesses.
Chris Sloan, senior manager at Avalere Health, agrees that the small-business program’s end seems nigh. But he says it may not matter much since SHOP’s impact has been marginal at best.
“It never caught on. It was delayed for years, so the demand just wasn’t there at all for SHOP,” Sloan tells AIS Health. “It honestly just looks like they’re looking for a way to wind it down and then have those small businesses currently using it go directly through agency brokers or insurers.” Since small-business tax credits would be available for companies deemed eligible that don’t use the online portal, he says, “It’s really just taking away any reason to use the SHOP.”
Sloan notes that, while part of SHOP’s idea was access to the small-business tax credit, “the tax credit wasn’t that much and not many employers qualified for it.” To qualify, businesses must have no more than the equivalent of 25 full-time workers, pay average annual wages below $50,000, and cover at least 50% of the cost of health care coverage for their workers, according to HealthCare.gov. The maximum credit goes to employers with 10 or fewer full-time equivalent employees with average annual wages of $25,000 or less.
Instead, large employers got involved in private health insurance exchanges and small employers worked directly with brokers. Another aim of SHOP was to lift some administrative burdens from small employers, helping businesses set employer contribution limits as well as qualify for tax credits, he says.
SHOP Covers 230,000 Individuals
CMS, in proposing the rules change, cited the Congressional Budget Office (CBO)’s estimate that 4 million people nationwide would enroll in coverage through SHOP exchanges by 2017. Instead, as of January 2017, approximately 27,000 employers bought insurance through federally facilitated and state-based SHOP exchanges, covering nearly 230,000 individuals across the U.S.
Michael Capaldo, an employee benefits consultant in Coram, N.Y., a state that runs its own ACA exchanges, notes that about 2,800 employers offer coverage through New York’s Small Business Marketplace (SBM) and total enrollment for employees and their dependents is below 12,000. “I would have to say it’s not knocking the cover off the ball,” he says.
“New York has 19.8 million people, I think, and somewhere in the neighborhood of 10 million are on Medicare or Medicaid,” Capaldo tells AIS Health. “Out of approximately 10 million people that might have a run at this, 11,769 [SBM’s enrollment, according to the latest state exchange data] is a small number, so it hasn’t been going well.”
CMS’s announced SHOP enrollment change “would have to be encouraging to agents, brokers and employee benefits consultants in those markets that will be moving in this direction,” he says. “But bear in mind, in New York, agents, brokers and consultants had the ability to sell this product all along.”
Attorney Chris Condeluci, principal of CC Law & Policy in Washington, D.C., describes CMS’s announcement as “significant because it signals that the Trump administration views HealthCare.gov as having some utility, but only as a mechanism through which eligibility determinations should be made.”
Condeluci, who worked for the Senate Finance Committee during the ACA’s drafting, said the proposed SHOP change also signals that the Trump administration feels that consumer aspects of exchanges — enrollment functions — should be performed by agents and brokers, as well as insurance carriers, through direct enrollment.
“In my opinion, if Republicans are ever able to get to their ‘replace world’ where a modified tax credit is available to consumers in the individual market, I believe we will see a similar reliance on the existing ACA exchange information technology (IT) infrastructure when it comes to determining eligibility for the tax credits,” he said in a note May 17. “But we will see a significant shift in how agents/brokers and insurance carriers can engage consumers, and ultimately enroll consumers, in an individual market plan.”