When it set the final rules implementing small-business health insurance exchanges for next year, the federal government gave states the option of taking a one-year pass on one of the exchanges’ most attractive features: the opportunity for small-business employees to choose among a variety of health plans. This week, the Department of Health and Human Services announced that 18 states would in fact defer employee choice until 2016.þþThe 18 states are: Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, and West Virginia. But as many 33 small business insurance exchanges will offer employees a chance to choose among health plans in 2015.þþIn the most basic form of employee choice, the company picks a level of coverage, based on how much of the cost of care the employee will pay out of pocket. Employees can then choose any plan within that tier of coverage, where plans may vary by, say, doctor network or the amount of the deductible. Some consumer and small business advocates strongly support employee choice as an essential tool to give employees more control over their own coverage.þþThe Affordable Care Act created state-based health insurance exchanges for both the individual and small group markets. Apart from employee choice, there is little advantage for a business to buy insurance through a small-business exchange, unless it is small enough to qualify for a tax credit for purchasing insurance. The same plans are available off the exchange (along, in most places, with many other plans not offered on the exchange) at the same prices. The federal government is running the small-business marketplaces, often known as SHOP exchanges, in 32 states that declined to do it for themselves.þþþþAccording to the regulations, state insurance commissioners had to convince the department that deferring employee choice “would be in the best interests of small employers and their employees and dependents.” The commissioners’ petitions were broadly similar, echoing, as expected, insurance carriers’ concern that adverse selection and administrative challenges resulting from choice would increase health insurance premiums for small businesses both in the exchanges and outside of them. In Michigan, for example, the commissioner reported that four of the five biggest small group issuers said they would not participate in the small-business exchange if employees were granted choice.þþDelaware’s insurance commissioner, Karen Weldin Stewart, a Democrat, raised an interesting argument against allowing choice in the SHOP exchanges: There is nothing in it for insurance agents. “Most small employers rely heavily on agents and brokers in the decision-making process and pushing enrollment on the SHOP requires more of the agent’s resources without any additional compensation,” she wrote. “The burden will be amplified in an employee choice environment, where multiple options will require substantially more time to educate employees and provide ongoing support to the employer.”þþLongtime backers of the Affordable Care Act said that the government was too generous in granting delays to the states. “In order to be granted a delay, states needed to provide concrete evidence based on a documented assessment of the full landscape of the small group market that implementing employee choice would cause adverse selection and raise prices,” said John Arensmeyer, chief executive of the liberal advocacy group Small Business Majority, in a statement. But, he added, “despite a failure to meet the standards, every state that requested a delay was granted one.”þþSupport for choice is hardly universal among businesses. Both the U.S. Chamber of Commerce and the National Small Business Association joined an insurance industry coalition lobbying against employee choice in favor of employer choice — the employer’s choice to pick a single health plan for all its employees.þþThe government sought to put the best face on the announcement, noting that 14 states* with federally run SHOP exchanges would offer employee choice in 2015, joining most of the state-run SHOP exchanges. The agency would not say which state-run exchanges were passing on choice for this year, because not all of those states had notified it of their decisions. (Eighteen states and Washington, D.C., are running their own SHOP exchanges.) But, it said, “in 2015, nearly two-thirds of Americans will live in states where small-business workers can choose a health plan rather than have their employer do it for them.”þþStrikingly, the decision to either defer or embrace employee choice largely appeared free of the overt politics surrounding the Affordable Care Act. One-third of the commissioners who sought, and received, the one-year delay were Democrats or appointed by a Democratic governor. And the commissioners who opted not to postpone choice were largely Republicans, including Georgia’s Ralph Hudgens, who last year vowed that when it came to the health law, his office would do “everything in our power to be an obstructionist.”þþOne exception was Pennsylvania insurance commissioner Michael F. Consedine, an appointee of Republican governor Tom Corbett, who used the occasion to take a swipe at the Obama administration. The opportunity to seek a delay, he wrote, is “another example of a troubling pattern from H.H.S. on implementation of the Affordable Care Act — decisions with the potential for negative impacts on consumers are handed to the states.”þþThough some advocacy groups have worried that delay in employee choice could be extended beyond 2015 — and some insurers argued for precisely that — the Health and Human Services Department was adamant in its final rule that deferring choice was a one-year transition policy only. “We expect that by 2016, states and issuers will be able to learn from the experiences of issuers in a wider range of SHOPs that have implemented employee choice so that any adverse selection concerns will no longer be material,” the agency said. The administration reiterated that stance in its announcement on Tuesday.þ
Source: NY Times
