Commonwealth Fund: 3 Observations About the PPACA SHOP Marketplaces

Small businesses have historically been less likely to offer comprehensive health insurance or a choice of health plans, and their employees are more likely to be underinsured or not have insurance at all, according to a report from The Commonwealth Fund.

The Patient Protection and Affordable Care Act seeks to change that through the Small Business Health Options Program, which creates marketplaces designed to be one-stop shopping portals aggregating the purchasing power of numerous small companies. The PPACA requires SHOP marketplaces to be available for businesses with 100 or fewer employees by 2016. So far, 17 states and the District of Columbia have launched or plan to operate SHOP marketplaces this year, while the federal government is running SHOP exchanges in 33 states.

The Commonwealth Fund examined state action to establish SHOP marketplaces. Here are three observations from the group's report.

1. In establishing SHOP marketplaces, states have generally looked to avoid disrupting the existing small-group market. States have historically defined small firms as those with as many as 50 workers, and, in 2014, all states running SHOP exchanges have chosen to limit eligibility to companies with 50 or fewer full-time employees. Many states have also enacted minimum participation requirements concerning the percentage of workers within any group that must enroll in SHOP coverage to mitigate concerns about adverse selection and create a predictable standard, according to the report.

2. The report also found nearly all state-based SHOP exchanges have attracted a competitive selection of health plans spanning a range of coverage levels. In all but four states (Minnesota, Nevada, New York and Washington), the marketplaces have participation from more than one health insurer in each county. New York has the most insurers participating in its marketplace (10), while Washington has just one insurer taking part in its SHOP exchange.

3. Under the PPACA, SHOP marketplaces must offer employee choice, meaning businesses chose a metal tier of coverage and allow their workers to select any health plan within that tier. Although HHS delayed this requirement until 2015, 16 states and D.C. plan to offer it this year. Additionally, all states except California plan to offer small businesses with employee choice models beyond what the PPACA requires, and seven states (Hawaii, Minnesota, New York, Oregon, Rhode Island, Utah and Vermont) have chosen to let employers give their workers their pick of any plan in the SHOP exchange.

More Articles on PPACA Marketplaces:
CMS Finalizes 2015 Payment Parameters, Standards for PPACA Plans  
White House Delays Small Business Exchange Launch by 1 Year  
Small Business Employees Could See More Choices Under PPACA