CMS floats changes to health insurance marketplaces for small businesses

The Centers for Medicare & Medicaid Services wants to tweak the SHOP marketplaces to lessen the role of the federal government.

While the Senate works on a bill to replace the Affordable Care Act, the Trump administration is planning to revamp one of the lesser-known aspects of the law: the health insurance marketplaces for small businesses.

The Small Business Health Options Program (SHOP) marketplaces allow companies or nonprofit organizations with 50 or fewer employees to select and manage various coverage options. However, they have struggled from the beginning with lower-than-expected enrollment figures.

Fast forward to 2017, and about 27,000 employers nationwide have active coverage through either federally facilitated or state-based SHOP marketplaces, covering nearly 230,000 individuals, according to (PDF) the Centers for Medicare & Medicaid Services. Those figures, CMS points out, are well below the 4 million people that the Congressional Budget Office had initially estimated would enroll in coverage through those exchanges by 2017.

To the new crop of federal health officials, that performance suggests the need for change. Thus, CMS intends to propose a plan under which small employers and employees that use Healthcare.gov to enroll in coverage would have to go through an agent, broker or insurer for online enrollment. The new policy would take effect for plan years beginning on or after Jan. 1, 2018.

Employers would still have to go to Healthcare.gov, however, to determine if they are eligible for SHOP. In addition, employers would still be able to access the Small Business Health Care Tax Credit if they qualify.

As for states that operate state-based SHOP marketplaces, CMS said it anticipates they "would be able to provide for online enrollment," or they could opt to direct small employers to insurance companies and SHOP-registered agents and brokers to directly enroll in coverage.

“The ACA has failed to provide affordable insurance to small business and to the American people,” CMS Administrator Seema Verma said in an announcement about the proposed changes. “This new direction will help employers find affordable healthcare coverage for their employees and make the SHOP exchanges function more effectively.”

At least one group, though, is not happy with the proposal. In an emailed statement, the Small Business Majority expressed its disappointment that under CMS' plan, "small businesses would only be able to window shop for SHOP coverage through Healthcare.gov" and would then have to take the extra step of working with a broker or buying insurance directly. 

The group added, though, that the proposal isn't a surprise, as "the success of SHOP has not been a priority" in the past, leading it to fall short of expectations.

Indeed, unlike the individual market, the small business market was already well developed, making it a "nice-to-have, not a need-to-have like the individual exchanges are for millions of Americans," former CMS acting administrator Andy Slavitt wrote in an email to FierceHealthcare, adding that the agency "prioritized and resourced it accordingly."

The proposed SHOP changes are consistent with what seems to be the underlying philosophy of CMS and the Department of Health and Human Services (HHS) under the Trump administration: Lessen the role of the federal government. For example, both Verma and HHS Secretary Tom Price have encouraged governors to apply for waivers to revamp their Medicaid programs, arguing states know best how to manage care for low-income populations.

Editor's note: This article has been updated to add in comments from Andy Slavitt and the Small Business Majority.