Thousands of people have submitted applications to buy health care coverage through Connecticut’s new insurance exchange, but small businesses haven’t been as eager to test the online market.
In the first three weeks, only about 30 companies submitted applications to purchase health benefits through Connecticut’s Small Business Health Options Program (SHOP).
The SHOP exchange, run by Access Health CT, is mandated under federal health care reform and aims to provide more affordable insurance choices to small businesses with 50 or fewer employees.
In Connecticut, three insurers — Anthem Blue Cross and Blue Shield, HealthyCT, and UnitedHealthcare — began Oct. 1 offering coverage through SHOP.
But small firms — executives, brokers, and industry experts say — remain confused about how the federal health care law will impact their bottom line. As a result, they aren’t rushing to make major changes to their benefit plans.
“A majority of small groups are still taking a wait-and-see approach because they don’t know how the change will impact them yet,” said Brian Driscoll, chief operations officer of Ovation Benefits Group in Farmington.
Since going live, the SHOP exchange generated confusion within the business community. Several insurance brokers contacted by Hartford Business Journal immediately following the launch said they thought the exchange wasn’t actually running. Other brokers said they didn’t think businesses could buy insurance on the exchange until Nov. 1.
But Phil Boyle, the business-to-business outreach manager for Access Health CT, said SHOP is operational and accepting applications.
The confusion, he said, stems from insurers being able to sell health plans on and/or off the exchange. Insurers have submitted premium rates for health plans sold on the exchange, but rates have not been made public for small group insurance plans to be sold outside the new online marketplace.
As a result, businesses can’t compare rates to determine the best deal, forcing small firms to hold off purchasing decisions.
Still, Boyle said he is pleased with the interest businesses have shown in SHOP, noting the exchange’s largest target market is individuals.
Access Health CT projects up to 100,000 people will obtain insurance or Medicaid coverage through its exchange by March 31, but only about 20,000 enrollees will come from the small group market.
SHOP’s major attraction, Boyle said, is a tax credit paying up to 50 percent of an employer’s premium cost. Starting next year, that credit is available only for plans sold through Access Health CT.
“That will help generate a lot of interest,” Boyle said.
But Driscoll, of Ovation Benefits, and other brokers say they are skeptical SHOP will have widespread appeal among small firms. One issue: the tax credit is only available to companies with fewer than 25 workers, and whose average employee wages are below $50,000 annually.
“The challenge is, there aren’t a lot of employer groups in Connecticut that qualify for the tax credit,” Driscoll said.
Small business owners and brokers say they worry exchange insurance plans aren’t affordable without federal subsidies, because of the robust benefits they are mandated to offer.
A recent U.S. Department of Health and Human Services report outlining state health insurance premium projections under the Affordable Care Act ranked Connecticut as the fourth-most expensive in the country.
Uncertainty reins
Kevin Galvin, owner of a small commercial maintenance firm in West Hartford with three employees, advocated for federal health care reform, but said he’s not sure if he will buy small group insurance through Access Health CT.
He’s wanted to offer insurance to his employees for years to remain competitive in attracting and retaining workers, but couldn’t afford coverage. In 2009, he launched a small business advocacy group pushing for sweeping health care reforms in Connecticut.
Galvin said uncertainty about the Affordable Care Act (ACA) among his and other businesses makes firms hesitant about buying coverage through SHOP. He said many small firms plan to stop offering insurance and force employees to buy coverage from the exchange’s individual market instead.
The ACA doesn’t require small businesses with 50 or fewer workers to offer health benefits.
“I want to see how it unfolds a little bit,” Galvin said. “The exchange was marketed early on as being low cost, and many of us thought that was a strategic error. Insurance in Connecticut is not low cost.”
Boyle, however, said small businesses will test the exchange market.
He points to a 2011 study by Lewin Group saying 36,000 small Connecticut firms would be eligible for the tax credit.
“A lot of these groups haven’t offered insurance in the past, or not the level of coverage being offered in the SHOP exchange,” Boyle said. “For competitive reasons, they are looking for a way to offer their workers health benefits.”
Rule changes
Clearly, the new landscape for purchasing health benefits is complicated.
Countless new ACA regulations have changed the rules of the game. If small employers want a one-size-fits-all strategy to employee benefits, brokers and industry experts say there isn’t one.
Small firms with young, healthy workers may see insurance costs rise under Obamacare, while firms with older, less healthy workers — which have traditionally paid the most for insurance — could see rates drop.
Small firms need to assess their risks and choose a plan for their needs, brokers say.
Edward Rapacky, president of Benefits Resource Group in Plantsville, said many firms are choosing to stay with their current plans. In some cases, insurers are making it enticing to do so.
Anthem Blue Cross and Blue Shield is offering Connecticut businesses the opportunity to renew their benefit plans early, at or near their current rates, prior to Jan. 1, when key ACA provisions start.
That plays into many small firms’ fears that their health care costs will rise significantly next year because of new ACA provisions, including a rule restricting insurers from charging sick people higher prices, Rapacky said.
In a written statement Anthem said its “goal in offering our small group customers renewal options, including earlier renewal, is to help employers select a benefit plan that best fits their needs and transitions them to the new market requirements.”
Early renewal is not the right option for all small firms, said Jason Gutcheon, a broker with Professional Business Insurers in West Hartford.
He has one predominantly female small business that may see rates drop next year because the ACA forbids charging women higher premiums.
Meanwhile, Gutcheon said another small group client with 10 employees is sending two of its older, lower paid workers to the exchange’s individual market, because their premiums will be cheaper by over $1,000.
