Feds take slow approach to small firms’ exchange

Georgia’s small businesses will be limited to offering their employees just a single health plan – instead of several – in an insurance exchange next year.

States will get insurance exchanges — online marketplaces offering comparison shopping on coverage — starting Jan. 1, as a result of the Affordable Care Act.

Georgia and most other states have opted to have their exchanges run by the federal government. And in those states, the Obama administration has decided to delay offering a choice of health plans in the exchange for small employers until 2015.

The administration’s decision to start off slowly comes as a disappointment to supporters of the ACA. They had argued that the 2010 law would spark new competition among insurers, and lower prices, to attract small businesses.

Even some critics of the ACA have seen exchanges as good way to offer more options to insurance buyers.

(Besides the small-business marketplace, the ACA also provides for state exchanges for individuals to buy insurance. Those exchanges presumably will offer a choice of health plans beginning next year, as originally planned.)

Affordability of health insurance has remained a top concern of small businesses, and many firms that offer coverage to workers face double-digit percentage increases in premiums every year.

The lack of competition in the small business exchange next year “certainly won’t help,’’ said Kyle Jackson, state director of the National Federation of Independent Business, which opposed the ACA. Jackson predicted Tuesday that the law would lead to insurance “sticker shock’’ for employers when the exchanges debut in January. 

The Obama administration cited “operational challenges” as a reason for the delay, the New York Times reported. Exchanges for individuals and small businesses are scheduled to start enrolling people Oct. 1.

“This announcement is a setback for workers in small firms who do have some coverage today but were looking forward to having the health insurance choices that their peers in larger companies enjoy,’’ said Cindy Zeldin of Georgians for a Health Future, and a supporter of the ACA.

“It is our hope that the insurance industry and the administration will resolve this issue as quickly as possible so that the [small business] exchanges can fulfill their promise of leveling the health insurance playing field for employees of small firms,’’ Zeldin said.

The White House said that the government and insurers needed “additional time to prepare for an employee choice model” of the type envisioned in the law signed three years ago by President Obama, the Times reported.

A few states running their own exchanges, including California and Connecticut, said they plan to offer an employee choice option next year, though it is not required by the federal government, the Times said.

Bill Custer, a health insurance expert at Georgia State University, said Tuesday that the White House apparently felt it could not do the IT infrastructure for both individual and small-business exchanges in time for October.

Custer said the administration’s decision takes away almost all the advantage to small firms of going to the exchange, unless they don’t want to use an insurance broker.

Small businesses generally don’t offer employees a choice now, Custer said, adding that for these firms, “2014 will look a lot like 2013.’’

Small firms, though, still will benefit from the ACA’s provision barring price discrimination based on pre-existing medical conditions, Custer noted. A company will no longer see huge annual premium increases because one of its employees has a major medical problem, he said.

Still, some employers may drop coverage and have their workers buy coverage through the individual exchange, Custer said.

Mike Sullivan, president of Southeast Sealing in Conyers, has considered that option. For years, his insurance costs have jumped by 15 percent to 25 percent, forcing him to pare back coverage amid the recession.

Sullivan told GHN that he fears the Affordable Care Act “is going to cost me more.’’

“We may give our employees a sum of money and tell them to go find their own insurance,’’ he said.

Sullivan added that he has attended seminars on the new law in which the general message is, “We don’t know what’s going to happen.’’

Full implementation of the ACA in January will cause some dislocation and confusion, Custer said. He compared it to the Medicare prescription drug benefit, which took a couple of years before it started working smoothly.

At the outset of the exchange process, he said, “It’s going to be chaotic for a lot of people.’’