Limited tax credits, the ability to renew plans that existed previously and employer misconceptions are among multiple reasons why initial enrollment in the Affordable Care Act’s Small Business Health Options Program was nearly 1.9 million below expectations, according to a report released Thursday by the Government Accountability Office.
In April 2014, the Congressional Budget Office estimated that 2 million people would enroll through both state- and federally-run SHOP exchanges. As of June 2014, the number was 76,000 for state-based SHOP. The Centers for Medicare and Medicaid Services has not released the federally-run numbers but expects them to be low as well.
While all 33 of the federally-run SHOPs and 14 of the 18 run by the states were accepting enrollment applications as of the Oct. 1, 2013, open enrollment, many features of the exchanges were not operational, the report from the government watchdog states. Federally-run SHOPs never provided the ability to enroll online during 2014. Most state-based SHOPs had online enrollment portals by Oct. 1, 2013, except for Maryland, Oregon, California and Mississippi. California took its system offline in February 2014 due to technical challenges.
With no access to online enrollment, GAO states that employers had to enroll through the help of agents and brokers or directly through issuers.
The primary incentive for employers to use SHOP was a small business tax incentive, which was to be in effect for two years, and was provided for employers who purchase coverage through SHOP and have fewer than 25 employees.
GAO found the average number of enrolled employees in state-based SHOP exchange was 1.6 to 8.3 employees, suggesting that many enrolled employers may have been eligible for the credit.
However, stakeholders believe the tax credit is too small and administratively complex to motivate employers to enroll, they told GAO. Additionally since the credit is limited to two years that “may deter some employers from offering coverage,” CMS and an unnamed employer group told the GAO.
Anne Petry, a broker and consultant with Jaggi Insurance in Forsyth, Ill., agrees. She looked at SHOP for many of her clients and despite having fewer than 25 employees, none qualified for the tax credit, as the salaries were too high.
“It doesn’t motivate employers to enroll,” she says. “SHOP does not make sense for our clients. They are able to keep their pre-ACA plans and those rates are lower than the current ACA group plans through SHOP.”
Other factors that hindered enrollment include:
- Delays in features: GAO reports that stakeholders, including national employer groups, agents and brokers and insurance commissioners, say the delays in online enrollment were a hindrance to enrollment.
- Limited awareness and misconceptions: Many stakeholders, the report says, report a lack of employer awareness in the ability to enroll in SHOP beginning Oct. 1, 2013, largely due to misconceptions about whether the SHOPs were open for enrollment and a lack of outreach from states and CMS.
- Renewal of existing, noncompliant plans: Employers were allowed to renew their existing, non-ACA compliant plans, which limited enrollment. The GAO states that stakeholders say employers prefer to follow the status quo and feared potential premium increases with the new plans.
Looking toward the future, SHOP growth may increase as a result of agents and brokers, the report states. CMS, state exchange officials and issuers told GAO that coordinating with and providing Web- or phone-based tools to agents and brokers to facilitate SHOP will increase future enrollment.
States and CMS say they are taking steps to overcome issues faced by agents and brokers. For example, Kentucky officials are working to develop a tool that will allow agents and brokers to easily provide price quotes across multiple SHOP plans and are considering allowing SHOP-certified agents and brokers to initiate applications on behalf of employers.
In Illinois, state officials have developed a dedicated section of agents and brokers to obtain information on SHOP. And federal officials say establishing a broker portal for the federally -facilitated SHOP is a “key agency priority.” The agency says they plan to have a broker portal in place when online enrollment begins, which will allow agents and brokers to, among other functions, search for and communicate with employer clients, monitor employees’ enrollment progress; make changes to employee rosters; and receive messages regarding employers’ monthly invoices.
One negative noted in the report that may detract from future SHOP enrollment is competition with private health care exchanges. Agents and brokers and exchange officials from one state told GAO that these private exchanges for small group coverage will compete with SHOP. Additionally, some employers may choose in upcoming years to drop coverage for their employees and move to the public exchanges.
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