SHOP marketplace offers choice to small businesses

New research from the Commonwealth Fund suggests that small business owners should consider the Small Business Health Options Program as a means to navigate the choppy waters in this post-Affordable Care Act world through competitive choice.

According to the new brief, authored by Georgetown University researchers, the SHOP marketplaces – an effort by the federal government to reform the small-group market – offers smaller employers and their employees a choice of insurers and plans. Small businesses are categorized as employers with less than 50 employees.

However, SHOP marketplaces will be open in 2016 to employers with 100 or fewer employees, according to the ACA.

In 2014, approximately 17 states and the District of Columbia administer their own SHOP marketplaces; the remaining 33 states are managed by the federal government.

“For years, our research has shown that small-businesses owners and their employees are often priced out of the health insurance market, have very limited options when it comes to insurance, or are forced to select plans with high premiums and limited benefits,” says Commonwealth Fund President David Blumenthal, M.D. “The health reform law’s market reforms and SHOP marketplaces are an opportunity for small businesses to finally provide a range of affordable, comprehensive coverage options to their employees.”

The states and the federal government are currently are in different stages of launching their marketplaces, according to research by Sarah Dash, Kevin Lucia and Amy Thomas, research fellows at Georgetown University Health Policy Institute’s Center on Health Insurance Reforms.  

“We find that all state-based SHOP marketplaces standardized SHOP eligibility and participation requirements, and nearly all will offer a competitive choice of plans, allow employers to give employees multiple choices while setting a predictable contribution toward coverage, and provide features to create a more convenient shopping experience,” the research brief states.

According to state marketplaces, the percentage of eligible employees varies from zero to 100% in coverage for groups. Also, the number of insurers participating ranged from one in Washington to 10 in New York.

The states vary on employee choice options from a single plan to multiple tiers and multiple insurers. Employer contribution models in the current functioning marketplace also hold a minimum requirement. Researchers highlight that SHOP marketplaces ought to develop a “mechanism” that would allow employers to contribute to each employee’s individual premiums.

“In today’s small-group market, employers typically contribute toward a single plan for all employees,” the research brief says. “The SHOP marketplace offers employers a new value proposition: the ability to offer their workers a choice of plans while making a predictable contribution to coverage, regardless of the plan an employee chooses.”

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