Facing tight deadlines and complex IT requirements, the Obama Administration has decided to delay the operation of the Small Business Health Options Program (also known as the SHOP Exchange), at least as the SHOP was intended to operate. Congress and the regulators envisioned a marketplace where the employees of a small business with less than 50 employees could choose from a variety of coverage options, with premiums to be paid or subsidized by the employer. Small business employers would then pay a lump sum to the SHOP Exchange, which would then be distributed among the various carriers offering plans through the SHOP Exchange. For the 33 states in which the federal government will have a hand in operating the Exchange, this level of flexibility will not be an option until 2015. However, small businesses will be able to select a single plan through the SHOP Exchange to be offered to all employees. Senator Mary L. Landrieu, D-LA, chairwoman for the Senate Committee on Small Business and Entrepreneurship, states that the delay will “prolong and exacerbate health care costs that are crippling 29 million small businesses.”
What does this delay mean for North Carolina? Since North Carolina will not establish a state-based Exchange at this point in time, it appears North Carolina small businesses will have to wait a little longer to offer employees the intended flexibility in choosing a health insurance plan through a SHOP Exchange that meets the employee’s individual needs. However, small businesses will still have the option to purchase a group health plan as they do today, or to purchase a group health plan through the Exchange to offer to employees.
A variety of news outlets have reported on this development, with some calling it a political victory for states that have refused to establish a state-based Exchange. See these articles from Bloomberg BusinessWeek, the AP, Wall Street Journal (subscription required), USA Today, and Bloomberg News. Does this development foreshadow a possible delay of federally facilitated exchanges altogether? The answer to that question is anyone’s guess, although the Obama Administration remains adamant that the necessary regulations are in place for Exchange open enrollment to commence in October 2013.
UPDATE: The U.S. Department of Health and Human Services and the Obama administration confirmed the delayed operation of the SHOP Exchange on Friday, May 31, 2013. HHS indicated that it would not extend the delay beyond one year. As indicated above, small businesses may still utilize the SHOP Exchange in 2014, but will be limited to choosing one plan for all employees. Employees will not be able to choose from a variety of plans until 2015. See these reports from The Hill and The Washington Post for more information.
