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Some States Are Pushing ‘Employee Choice’ For Small Business Insurance

WebMD News from Kaiser Health News

By Julie Appleby

Thu, Jul 11 2013

Small business workers in at least 15 states and the District of Columbia may have a menu of health insurance choices next year, something that didn’t seem likely a few months ago.

Back in April, federal officials concerned about the potential for major glitches put off until 2015 a provision that would offer small businesses owners a way to allow their employees to choose from among a variety of competing plans in the new online marketplaces being overseen by the Obama administration.

Similar to last week’s announcement of a one-year delay in the requirement that businesses with 50 or more workers provide coverage or pay a fine, the move to delay the “employee choice provision” was cited by opponents as an example that the health law was in trouble.

Still, the decision at the time relieved insurers, who feared there wasn’t enough time left to sort out operational complexities, but proponents lamented a loss of choice for employees.

But now, as new marketplaces prepare to open for enrollment Oct. 1, it appears that most of the states creating their own online marketplaces are going ahead with “employee choice” for small business workers, researchers at Georgetown University’s Health Policy Institute found in a report Thursday for the Commonwealth Fund.

By doing so, the states hope to make the small business marketplaces — for firms with 50 or fewer workers — more attractive to employers and workers, said co-author Sarah Dash.

The “choice” option will not be available in the 33 states whose new marketplaces, also known as exchanges, are overseen by the federal government.  Small employers will still have the option of shopping for coverage through the marketplace, but workers’ choice of plans will be limited to the one their employer picks.

In the 17 states doing their own marketplaces, 15 intend to offer the choice model, as will the District of Columbia, according to the report. Idaho is not including an employee-choice program because it is using the federal marketplaces’ information technology platform, which will not include it. New Mexico is still considering its options.

Under the state programs moving forward, a business owner could pay a set amount toward coverage for each worker, then let each employee go to the Small Business Health Options Program, known as the SHOP exchange, to select from a variety of plans.  Workers could choose to pay the difference if they wanted a more expensive plan, or potentially see all or most of their premium covered if they chose a less costly one.

Insurers raised concerns late last year that the SHOP marketplaces will be very complex – and feared the marketplaces would not be ready to handle those issues this fall. They did not want to be required to participate unless there was a delay.

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