Md. small-business insurance exchange gaining traction

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After delays over the past few years while the system was designed and implemented, Maryland’s Small Business Health Options Program, or SHOP, has picked up steam over the past six months.

Officials now say the phase-in program — which lets small businesses qualify for tax credits and offer their employees health insurance plans from multiple carriers — is virtually complete now that a planned technological enhancement was deemed to be unnecessary.

As of July 20, 94 small businesses have purchased group plans through SHOP, up from 44 at the start of the year, said Michele Eberle, director of plan and partnership management for the Maryland Health Benefit Exchange.  In all, that’s 659 employees and dependents insure through SHOP, she said.

Of those businesses, about 83 percent have 10 or fewer employees; 12 percent have 20 or fewer employees; and 5 percent have 30 or fewer employees, according to the exchange.

Instead of creating a small-business exchange website from scratch, similar to the exchange set up for individual health plans, the state contracted with three established companies to create a unique system that built on their existing infrastructure.

These third-party administrators already had working relationships with insurance providers and brokers. Each administrator — Kelly & Associates Insurance Group Inc., Group Benefit Services Inc., both based in Hunt Valley, and the Dallas-based BenefitMall —will operate an online portal, allowing employers to browse and select from different health plans.

“Our goal was to have those portals available by July 2015,” Eberle said. “We’re on track to have that completed.” The Group Benefit Services portal has been up and running since the spring and Kelly’s was given state approval earlier this month; BenefitMall’s portal is likely to be approved shortly, she said.

Officials initially planned to have the three administrators adopt a standardized format for  data transmission and other changes for their portals but decided earlier this year that those changes weren’t needed, Eberle said. “For all intents and purposes, there’s no further development required of SHOP administrators,” she said.

Currently, federal law allows businesses with 50 or fewer employees to use SHOP; starting in 2016, businesses with 100 or fewer full-time employees can use it.

For employers, there are two main advantages to using SHOP rather than working directly with a broker or insurer. Employers with fewer than 25 full-time equivalent employees may be eligible for up to two years of tax credits of up to 50 percent of their premium costs.

They can also choose a health plan metal level — such as gold, silver or bronze — and allow employees to choose plans of that level from different carriers.

The notion of “employee choice” is still novel and isn’t well-understood by employees or employers, said Frank Kelly III, Kelly’s CEO. “It’s something that’s going to take some time to gain understanding,” he said. “I think there will be [more] interest.”

Providing a choice between carriers could make employees happy and less likely to leave, but it won’t really provide any savings or financial incentive for employers, said Brad Herring, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health and co-chair of the Small Business Exchange Advisory Committee convened by the state after the passage of the Affordable Care Act.

Herring said he was initially an advocate for creating a single, new exchange for small businesses to use, but he acknowledges that might have proven a disaster given the bungled roll-out of the state’s individual exchange website, which ultimately had to be scrapped and replaced with a new system.

But a well-functioning exchange might have ended up cutting brokers out of the process, Herring said.

With employers now able to use SHOP to offer a broader choice of health plans to their employees, the role of a broker is crucial, said Joe Appelbaum, president and CEO of Potomac Companies, an employee-benefit consulting firm that’s authorized to act as a broker for the Maryland SHOP plans.

The education brokers can provide about the differences between various plans is key, Appelbaum said. “You don’t get it from a website.”

Adapting the administrators’ existing systems to create the SHOP exchange was “the smartest move that could be done,” Appelbaum said. “The systems were already built.”