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5 ways small-group exchange plans went wrong

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Officials at the U.S. Government Accountability Office (GAO) have tried to provide an official answer to a burning Patient Protection and Affordable Care Act (PPACA) question: Why has the Small Health Options Program (SHOP) done so poorly?

GAO investigators prepared a report on the SHOP plan system at the request of Rep. Sam Graves, chairman of the House Small Business Committee. The investigators tried to find out just how the SHOP plans have actually performed, factors responsible for their performance, and ways to improve their performance in the coming year.

PPACA drafters created the SHOP system in an effort to offer small employers access to the same kinds of competitive, transparent markets and access to tax breaks that the PPACA individual exchange system provides for individuals. The state-based PPACA exchanges and the PPACA exchanges managed by the U.S. Department of Health and Human Services (HHS) now have more than 7 million paying customers enrolled in individual exchange “qualified health plans” (QHPs).

One finding: Even GAO investigators are unable to get data of any kind from HHS and the Centers for Medicare & Medicaid Services (CMS) on enrollment in SHOP QHPs. CMS, an arm of HHS, told the GAO that it hopes to have 2014 SHOP enrollment figures in early 2015, John Dicken, a GAO director, wrote in a summary of the GAO’s findings.

Investigators have found that the state-based QHPs have gotten about 76,000 employees, spouses and dependent children into SHOP plans. About 12,000 employers offer SHOP plans.

At the state level, the number of people known to be in state-based SHOP plans ranges from 42 in Washington state up to 33,696 in Vermont, which now requires all small groups to get their coverage through its SHOP exchange. New York and California, which both have new SHOP exchanges and no requirements for employers to use the SHOP system, each have about 10,000 people enrolled in SHOP plans.

For some of the GAO’s insights into what went wrong — and screenshots of some of the good parts, read on.

GAO report - SHOP delays excerpt

1. Exchange program managers took too long to make key SHOP plan features available.

One of the features PPACA supporters used to get the bill that became PPACA through Congress was that exchange users, including workers at small employers, would be able to choose from a menu of health plans.

Brokers, regulators, employers and others told the GAO that the lack small-group menu option in all states and other features may have hurt sales.

GAO report - SHOP misconceptions excerpt

2. Even many agents and brokers thought the government had postponed the introduction of the entire SHOP plan program.

When CMS decided to delay small employer access to the menu option at the HHS-run exchanges, and many state-based exchanges also decided to put off implementing the menu program option, many agents, brokers, healthy policy watchers, and employers thought that meant the public exchanges were putting off the start of the entire SHOP program.

Employers actually could buy SHOP plans everywhere but in Washington state, and they could even get SHOP coverage in two counties in Washington state, but the misconception probably added to SHOP marketing and sales woes, Dicken says.

GAO report - grandmothering/grandfathering excerpt

3. Decisions to let small employers keep pre-PPACA plans through “grandfathering” and “grandmothering” rules hurt sales of all PPACA-compliant plans, including SHOP plans.

Obama administration officials and state regulators dealt with exchange program glitches and employer group complaints by putting off the date when many employer plans would have to come into full compliance with PPACA. Many employers decided to stick with the partner they came in with.

GAO report - "hard to use" excerpt

4. Employers — and their agents and brokers — found that SHOP plans hard to use.

The employers that did set up SHOP plans did not have an easy time getting knowledgeable, polite, live-human help with problems. Stories of Web problems and customer service nightmares probably scared off some potential SHOP plan sponsors, Dicken says.

GAO report - hard to use excerpt

5. Exchanges had problems with working with agents and brokers.

Some exchange program managers had mixed feelings about working with agents and brokers, and some failed to offer producers basic tools because of all of the problems with getting the main individual enrollment sites working.

This year, the introduction of price quoting tools for producers, and the introduction of new and improved producer portals, could help, Dicken says.


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