Benefits brokers once expressed some fear about what the Small Business Health Options Program (SHOP) exchanges could do to their market.
See also: PPACA: Will Exchanges Be Producers?
The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) seemed to think that brokers were mostly a waste of money, in the group market as well as the individual market, and that putting a little regulatory elbow grease here and a little federal money could soon give garage owners and restaurants a chance to set up 30-life group plans all on their own.
Brokers defended their value in interviews. Managers of some state-based exchange programs, and the HealthCare.gov exchange program at the U.S. Department of Health and Human Services (HHS), eventually began to send signals of interest in making peace with brokers, and even of interest in taking brokers’ advice, but they showed less interest in paying brokers.
But there was some sense that brokers might just be whistling on their way to the graveyard, and that, this time, the customers really would figure out how to buy health plans online.
Instead, the exchange program builders seem to have followed the path that insurers and Web brokers made in the early days of the Web.
The first Web-based insurance sellers went from making grand predictions about displacing brick-and-mortar brokers in the mid-1990s, to responding to reality by shifting to connecting insurers with brick-and-mortar brokers, rather than with consumers, or to setting up big call center operations to supplement their Web sites.
Similarly, the exchange builders started with visions of paperless, human-less group sales websites in 2010 to a realization around 2013 that any group plan sales they made would probably come in through brokers, on paper.
For a look at how the new, humbled SHOP exchange system has done since then, read on.
1. Sales have been miserable.
HHS has been notoriously reluctant to release any numbers hinting at how many employers or workers might be using SHOP plans in the states with HHS-run exchange programs.
Charles Gaba has estimated at his ACASignups.net blog that the few SHOP exchanges for which enrollment data is available, either through exchange managers or insurance regulators, might have a total of about confirmed 72,000 SHOP plan enrollees. Based on those figures, he estimates SHOP exchanges throughout the country might be providing coverage for about 330,000 people.
Christopher Koller, president of the Milbank Memorial Fund, recently provided a SHOP exchange enrollment summary in written testimony submitted for a state legislature hearing in Hawaii.
Koller compared the bits of SHOP enrollment data he could find with estimates of the size of each state’s small group market and found that even many of the SHOP exchanges that provided enrollment data had captured less than 0.5 percent of the market.
Even in Vermont, which tried to give its state exchange an absolute advantage, by requiring all small-group sales to pass through its SHOP exchange, the SHOP exchange had captured only about half of the small-group market.