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U.S. Master Pension Guide, 2012 Edition
Part of CCH's Master Series of professional guidebooks. The book provides a comprehensive explanatory overview of qualified retirement plans and other retirement arrangements, reflecting up-to-date law changes and regulations. Benefit COLAs, calendars, and tables reflect the year 2012 figures.
from Spencer’s Benefits Reports: The Patient Protection and Affordable Care Act’s (ACA) state health insurance exchanges for small businesses are estimated to cover nearly 10 million employees, in addition to the 15.3 million individuals who will gain coverage through the individual exchanges when the law is fully implemented, according to an article in the February issue of Health Affairs. The article is part of a cluster of articles in the journal about the Small Business Health Care Options Program (SHOP), the formal name for the small business exchanges. The cluster of articles, supported by The Commonwealth Fund, examine SHOP’s potential to provide affordable insurance options for small employers who now face high premiums and administrative costs when they insure their employees. Under the ACA, the SHOP exchanges, along with the exchanges for individuals, are expected to be open for business on Jan. 1, 2014.
The ACA grants states considerable flexibility in designing their exchanges, such as allowing them to combine their small business and individual exchanges, limiting enrollment to companies with 50 or fewer employees or opening to firms of up to 100 employees through 2015, or reducing the ability of insurers in the exchange to charge premiums on the basis of age beyond what the law allows. Examining all of these options, the research found that merging the small business and individual market exchanges would bring 2 million more people into the exchanges, for a total of nearly 27 million, would reduce premiums for individuals by an average of $600 annually, and would reduce federal spending on premium subsidies by $4 billion. However, few of the other options had significant effects on coverage or costs. The study concluded that “these results suggest that states can make these design choices based on local support and preferences without fear of dramatic repercussions for overall coverage and cost outcomes.”
In an overview of the cluster of articles, Timothy Jost at Washington and Lee University School of Law asserts there is a real need for the SHOP exchanges as small businesses struggle to afford and manage health insurance for their employees. Jost concludes that in order to be successful, the SHOP exchanges will have to provide small employers with a more attractive alternative to the options currently available; keep costs affordable; offer employees choice, limit the burden posed by the insurance process; perform administrative functions; manage enrollment periods; and, perhaps most importantly, protect against adverse selection, which would lead to a disproportionate number of sicker individuals in the exchanges.
The Business Case
Author Jon Kingsdale, founding director of the Massachusetts Connector exchange, draws on his experience, and examples from Utah’s already functioning exchange for small businesses, to lay out a business case for the SHOP exchanges. He contends that in order to attract and retain small employers, while also fulfilling the goals of health reform the SHOP exchanges must:
Terry Gardiner, vice president for policy with the Small Business Majority and former Alaska state legislator, observes that often overwhelmed small business owners need an exchange that will fulfill many of the functions served by the human resources departments of larger businesses. Exchanges should assist small employers with other health insurance-related functions, such as wellness programs, COBRA coverage, and flexible spending accounts.
Self-Insured Plans
Concerns that recent trends towards self-insurance, meaning employers pay benefits directly to their employees, might draw small businesses away from the SHOP exchanges and cause higher costs in the exchanges by taking healthier participants out of the risk pool, are addressed in two separate articles. Christine Eibner and colleagues at the RAND Corporation find that self-insuring with “stop-loss” coverage may be less expensive to small businesses with healthy employees because they are not subject to state regulations and several provisions in the ACA.
The study concludes that allowing small businesses to continue to self-insure would have little to no effect on premiums in the SHOP exchanges and would likely increase the number of small business employees with health insurance. Mark Hall at Wake Forest University School of Law addresses what measures states might take if the trend towards self-insurance does lead to adverse selection in the exchanges.
Large Employers
Beginning in 2017 states can choose to open their exchanges to large employers. William Kramer, executive director for national health policy for the Pacific Business Group on Health, investigated the likelihood of larger employers joining the exchanges if they become open to them.
Kramer concluded that in the short-term (2014-2016), large employers may rely on the individual exchanges to provide coverage for their pre-Medicare retirees and part-time employees. However, large employer participation in the SHOP exchanges will depend on how viable the exchange marketplaces become, whether the ACA survives mostly intact, and whether the labor market becomes competitive again, he noted.
For more information, visit http://www.commonwealthfund.org.
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