(Bloomberg) — Enrollment in Patient Protection and Affordable Care Act (PPACA) health plans for small businesses is off to a slow start, leaving in doubt whether the program can attract enough customers to satisfy insurers.
Greeted by higher premiums, less generous coverage and more paperwork, small businesses that offer health coverage to employees are choosing to renew existing plans rather than buy them through the new Small Business Health Options Program. Complicating matters is the government’s failure to complete the SHOP website. In 36 states, there will be no website offering ready information on the plans until November.
The program is supposed to help insure the 31 million people who work at companies with fewer than 50 employees. In Kentucky, just 14 companies signed up for SHOP plans as of Jan. 1. Colorado enrolled 101, and Connecticut 106.
How does Connecticut’s Access Health CT think SHOP enrollment is going
“Lousy,” said Kevin Counihan, the chief executive officer. “We’ve done a very good job on the individual side. We’ve dropped the ball on the small-business side.”
The U.S. Department of Health and Human Services (HHS) reported this week that, as of Dec. 28, 2.2 million people were on track to get private health coverage through the federal- and state-run individual-market exchanges.
A core part of PPACA is the employer mandate that requires companies with 50 or more workers to offer affordable health insurance by 2015 or face a fine of as much as $3,000 per employee. While smaller businesses aren’t required to offer medical coverage, if they do, the plans must meet PPACA standards starting this year.
Many small businesses as a result took the strategy of renewing existing health plans for 2014, letting them put off the decision on whether to join Obamacare in 2015 or stop offering coverage to their workers. That may mean enrollment in SHOP exchanges won’t take off until the end of the year, said Carrie Banahan, executive director for Kentucky’s health exchange, Kynect.
WellPoint Inc. (NYSE:WLP, which offers its Anthem plans on the Kentucky and Connecticut small-business exchanges, saw strong early renewals of its 2013 plans in Kentucky, reducing interest in the exchange plans, Kristin Binns, a spokeswoman for the Indianapolis-based insurer, said in an e-mail.
“We estimated less small-group movement to the SHOP exchange than we did individual movement to the individual exchange,” Binns said. “And in many states early renewal impacted SHOP uptake.”
Part of the lag can also be blamed on SHOP plans that are too expensive, with premiums as much as 90 percent higher than what some firms paid last year, according to John Humkey, the owner of Employee Benefit Associates Inc., a Lexington, Kentucky-based insurance broker.
Humkey said he has signed up only one small-business client for SHOP, a local microbrewery that primarily wanted to take advantage of a complicated tax credit worth as much as 50 percent of the cost of premiums for businesses that can meet certain conditions. Most businesses aren’t interested enough in the credit to jump through the hoops, he said.
“The small-business owners, while they are out there working hard to manage their business, their focus is not on trying to understand the health-care law in order to put together a benefit package,” Humkey said.
Small businesses also face no deadline to enroll, unlike individual Americans shopping for themselves. Exchanges can sell small-business plans year round, while enrollment for individual plans closes on March 31.
Exchanges in larger states aren’t doing much better with their business plans. In New York, about 5,000 employees of small businesses have enrolled in the SHOP exchange, James O’Hare, a spokesman for the state’s Department of Health, said in an e-mail.
California, the most populous U.S. state, has enrolled about 500,000 people in its individual exchange. It has yet to provide a look at its small-business market. The state will report small-business participation “later this month,” Anne Gonzales, a spokeswoman for Covered California, said in an e- mail.