Let’s Keep Talking SHOP

A collection of papers in this month’s Health Affairs, and a companion Commonwealth Fund webinar, provided key insights for states working to design health insurance exchanges. Both examined how to design the Small Business Health Options Program (SHOP) in the federal health reform law to make it easier for small employers to offer affordable health plans. We wanted to share the webinar question and answers on State Refor(u)m in an effort to keep “talking SHOP.”
The webinar, “The Small Business Health Insurance Exchanges: Opportunities and Challenges,” featured the Commonwealth Fund’s Sara Collins as moderator and four authors from the Health Affairs collection: Timothy Stoltzfus Jost, Washington and Lee University School of Law; Jon Kingsdale, Wakely Consulting; Terry Gardiner, Small Business Majority; and William Kramer, Pacific Business Group on Health.
Following the presentations, Sara Collins invited questions from the 430-person strong audience.  Below are some highlights.
Q: The New York Times “You’re the Boss” column featured a small business owner, Ann Gish, who expressed frustration with the administrative complexities of offering insurance to her employees, saying that what she wants from reform is simplification. How would the panel respond?

• Terry Gardiner: We’ve found that the majority of small business owners haven’t heard of exchanges, how they would work, and what they could do for small businesses. Once they learn more about them they become very intrigued. In Ms. Gish’s case, where she had one employee who really needed a different plan from the group plan she selected, I think the exchange is tailor made. As a small business owner, you may be able to pick a plan that works for 70 percent of employees but maybe you’ve got 30 percent who need a different plan, network, or level of coverage. Employers will be able to accommodate this through exchanges. Fitting the needs of all employees will be a real bonus.

Q: Should businesses using the exchange expect it to be an active purchaser or open market place?

• William Kramer: It obviously will vary state-to-state depending on the nature of the existing individual and small group markets. Having a set of performance measures for the qualified health plans (QHPs), that will be sold through the exchanges and their affiliated providers—and encouraging and rewarding QHPs that are, for example, moving away from fee-for-service to provider payment arrangements that reward quality and efficiency—are the kinds of things that an “active purchaser” would do. Large employers do it now, and they would assume and hope that the exchanges would do it as well because it simply makes sense.

Q: How will the federal government approach the development of SHOP, versus the individual exchanges, in states that have chosen not to set up their own exchanges?

• Tim Jost: The guidance that HHS has put out thus far is that they have a strong preference, as does the statute, for state operation and ownership of the exchange. Yet it’s becoming increasingly clear that a fair number of states are not going to be up and running in the fall of 2013. Where the federal government has to step in initially to run the exchanges, I think it will be quite happy to hand off the exchange once the state gets to the point where it can take over. The federal government will also try to work closely with the states in the operation of the exchanges. So I don’t think we’re going to see federal- or state-exclusive exchanges as the only alternatives going forward, but rather there will be a continuum. It will be clear who is ultimately in charge, but most exchanges will be partnerships.

• Jon Kingsdale: I think that the challenge for a federally facilitated exchange in any state when dealing with small employers, as opposed to individuals, is that there really is a high degree of customization required to serve those employers, and especially to reach them to communicate about group health insurance and other employee benefit options. I don’t want to say that the federal exchange will not do as well with SHOP as with non-group, but I think they’re going to have to find a way to customize to the more regionalized and local service requirements, marketing components, and communications channels required for the SHOP exchange.

The audience also asked many questions that could not be answered in the hour-long webinar. We invite you to share your knowledge and experience to help answer the following questions:

• Will small businesses who have Medicare-eligible retirees be able to use the exchanges to purchase supplemental insurance?

• How might the SHOP exchange function as a purchasing ally with large employers?

• How might the exchanges encourage wellness and prevention programs?

• Jon Kingsdale’s article in Health Affairs mentions the possibility of states opening up the SHOP exchange to Medicaid managed care plans. What are some of the issues to consider in states’ supporting Medicaid managed care plans in selling in the SHOP exchange? (Note: Kingsdale’s full article is available on State Refor(u)m for a limited time.)

• Tim Jost’s summary in Health Affairs highlights research showing that merging the individual and small group markets reduces premiums substantially in the individual market, but does not greatly increase the cost of small group coverage. How is the exchange in your state working to understand expected market challenges and changes?  Does this research make you rethink your strategy? (Note: Jost’s full article is available on State Refor(u)m for a limited time.)

Please post your ideas, experiences, responses or additional questions by clicking the “post new comment” button below.
Guest bloggers Tracy Garber, Sara Collins, and Ruth Robertson are with The Commonwealth Fund in New York, NY.