The popularity of small business exchanges is off to a slow start--only two percent of all eligible businesses have explored small business health options program (SHOP) exchanges in the 15 states, plus the District of Columbia, where they're offered under the Affordable Care Act, reports Insurance News Net.
For SHOP exchanges to reap the benefits anticipated under the ACA, they must attract a large pool of businesses. Hopefully, this will lead to lower prices, notes the article.
But these savings are yet to be seen. For starters, insurers encouraged business owners to renew their plans before October of last year, to avoid purchasing a new policy during the first year of the ACA.
Then back in November, President Obama delayed a key aspect of the ACA, which stated individuals who purchased plans prior to the healthcare reform law may choose to keep coverage for another year, FierceHealthPayer previously reported.
What's more, employers with fewer than 50 employees are not required to offer them health insurance, and can then encourage the employees to purchase a plan through a SHOP. However, the ACA does not require business to do so.
Due to these outlying factors, many businesses have not purchased new policies for their employees. Also, not many employers have taken advantage of the federal tax credit under the ACA that provides a federal tax credit to cover up to half the cost of the employer's share of premiums for businesses with fewer than 25 employees, according to Insurance News Net.
The biggest issue plaguing small businesses is cost. Back in February, the Centers for Medicare & Medicaid Services reported about 65 percent of small businesses will experience a rise in premiums, FierceHealthPayer previously reported.
So until a large number of businesses start purchasing plans through SHOP, which also will give insurers the opportunity to compete with other carriers, there will not be enough competition to drive down prices, suggests Insurance News Net.
For more:
- here's the Insurance News Net article