New Issue Brief Reviews Employee Choice in Small Business Health Options Program (SHOP) Marketplaces

Employees of small businesses with fewer than fifty workers have traditionally been at a disadvantage when it comes to accessing health insurance coverage compared to their counterparts with large employers. Prior to the Affordable Care Act, various factors made offering health insurance too costly or too administratively difficult for many small businesses. Unlike large employers, the few small businesses that did offer health insurance coverage typically offered only one plan to their employees. Approaching health coverage as a one-plan fits all health needs, small businesses limited the choice of their employees, placing a hardship on employees that needed more health coverage. In order to level the playing field, the Affordable Care Act not only made small group friendly changes to the market, also referred to as small group-market reforms, it also created the Small Business Health Options Program (SHOP) Marketplace in each state to allow small businesses to shop in one place for their health insurance needs.

SHOP Marketplaces also create a mechanism for employee choice that allows employees of small businesses to select from among various health insurance plans to find the one that best suits his or her needs. While the ACA intends employee choice to be a standard feature in SHOP Marketplaces, various technological and operational issues have delayed implementation of employee choice, making this feature voluntary until 2016. In a recent Health Policy Brief published by Health Affairs, CHIR’s Sara Dash and Kevin Lucia review how Marketplaces are implementing SHOP Marketplaces and consumer choice. The brief also reviews the type of employee choice models that SHOP Marketplaces are offering and highlights the policy debates behind providing employee choice. Their brief finds that most SHOP Marketplaces will be offering employee choice in 2015, and as a CMS official recently noted at a U.S. House Small Business Subcommittee meeting, in 2015, “nearly two-thirds of all Americans will live in states where small business employees could be offered the option to choose a health plan rather than have their employer do it for them.” In 2016, the option of employee choice is expected to be available nationwide.

To read the full issue Health Policy Brief, Employee Choice, visit the Health Affairs website.

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