State health insurance exchange aims to enroll 7,000 small firms
Trying to stem a steady erosion in employer health coverage, California’s insurance exchange said it’s looking to enroll 7,000 small businesses next year as part of the federal healthcare law.
At an event in Los Angeles on Monday, officials with Covered California said their online marketplace for small firms is fully operational and that more than 1,500 businesses had already created shopping accounts on the state website.
California officials sought to dispel any confusion after an employer-related delay last week by the separate federal exchange in 36 other states. U.S. officials postponed their online enrollment for small businesses while they focus on fixing the troubled HealthCare.gov website for individual consumers. California’s website has suffered far fewer glitches and has reported solid enrollment gains since it was launched Oct. 1.
The primary focus of Covered California and the bulk of its marketing money is geared toward signing up individuals and families for health insurance before open enrollment ends March 31. The state is trying to enroll as many as 700,000 people in subsidized health insurance by April 1.
The state’s goals for small business are more modest. The California exchange said it wants to sign up 40,000 workers through 7,000 firms in 2014. There are no enrollment deadlines for small businesses, so sign-ups will run all year.
The soaring cost of health insurance has taken its toll on employers in recent years. Sixty percent of California employers offered health insurance in 2012, down from 71% a decade earlier, according to the California HealthCare Foundation. Fewer than half of the smallest firms, with three to nine workers, offer health benefits.
Premiums for employer health insurance in California jumped 170% over the last decade, more than five times the 32% increase in the state’s inflation rate. Most small businesses cite the high cost as the primary reason that they don’t offer coverage.
State and business leaders said Monday that making health insurance more affordable for small business owners is crucial to reduce the number of uninsured and to help entrepreneurs compete with bigger firms for talented workers.
Peter Lee, executive director of Covered California, said many but not all small businesses will be able to find lower rates in the state exchange. There are also federal tax credits available to some small firms through the exchange that can lower costs even more.
Businesses with fewer than 50 employees can use the exchange’s Small Business Health Options Program, also known as SHOP. However, they are not required to do so under the Affordable Care Act. Small businesses can still purchase health benefits outside the exchange.
California has tried purchasing pools for small businesses before. An earlier attempt called PacAdvantage shut down in 2006, hurt by a lack of insurers and dwindling enrollment that caused rates to spiral up.
“Today is a new day and thanks to the Affordable Care Act, we can reopen the doors,” said Paul Fearer, a board member of Covered California who was involved in the previous effort.
Like individuals, many small businesses in California have been dealing with confusion over cancellations of their existing coverage because it doesn’t meet all the requirements of the healthcare law.
But small firms have an alternative many individuals do not. Insurers in the state were allowed to offer early renewals that enable small employers to hold onto their current health plans through 2014.
Insurance agents say many small businesses have gone that route to allow them more time to consider their options.
“A good chunk of my clients are pushing the decision until December 2014,” said broker Tom Polenzani, president of Polenzani Benefits and Insurance in Pasadena. “This won’t be a storm all at once, but a slow moving tsunami.”