Agents And Brokers Struggle With SHOP

By Cyril Tuohy InsuranceNewsNet

By Cyril Tuohy

Benefits advisors, agents and brokers faced big hurdles in helping small businesses find coverage using the Small Business Health Options Program (SHOP). That’s according to a new report by the Government Accountability Office (GAO).

Issues such as inaccessible customer service, poor broker training, working out how to receive fair compensation, and the lack of dedicated broker “portals” on some SHOP websites have given agents and brokers a difficult time with a key section of the Affordable Care Act (ACA).

“Agent and broker representatives from one state noted that challenges such as these have led some agents and brokers to avoid recommending that their small employer clients use the SHOP,” the GAO report said.

Partly as a result, enrollment through the SHOP program has lagged far behind expectations: As of June 1, only about 76,000 lives are enrolled under the federal or state-based SHOPs, the report found.

Last April, the Congressional Budget Office estimated that 2 million employees would enroll through the federal and state-based SHOPs this year, with that number gradually rising to about 4 million by the end of 2017.

By contrast, the number of individuals enrolled under the ACA by last spring was about 7.5 million, the government estimates.

The 76,000 lives covered through SHOP — including employees, spouses and dependent children — were bought through 11,742 small employers. Enrollment varied from only one person in Mississippi to more than 13,600 people in Vermont, the GAO report found.

Some of the SHOPs were operational only last spring, and while SHOPs were operational in every state by June 1, not all SHOPs offer easy access to the same features. Most buyers were drawn to the SHOPs through a small business tax credit.

Even so, the number of enrollees is far below government estimates of where the SHOP program was expected to be. Business owners said the tax credit was too small and burdensome to implement, providing a disincentive to the sign up.

The 45-page report, delivered to the House Committee on Small Business, concluded that the “early evidence suggests enrollment is significantly lower than anticipated amid the delayed availability of key functions among many SHOPs and misconceptions by employers about the availability of SHOPs.”

The report was intended to brief lawmakers on the state of the SHOP program a year after it was launched as part of health care reform. It provides the first comprehensive look at how the SHOP program fared during its first year of operation.

Jim R. Esquea, assistant secretary for legislation with the U.S. Department of Health and Human Services (HHS), said the government is working to make the SHOP program more attractive to small employers.

Small employers began shopping for 2015 coverage on Nov. 15. Esquea told the GAO that employers can expect a much smoother buying experience. Small-business owners will have access to a “federally-facilitated SHOP experience.”

Buyers — using agents and brokers — will have access to new features such as a choice of health plans for employees in many states, premium aggregation services and a dedicated online system for licensed agents and brokers to assist their SHOP clients, Esquea said.

The report also found that better coordination with agents and brokers to make enrollment easier would boost SHOP’s enrollment numbers, particularly as insurance carriers phase out noncompliant health plans.

SHOPs are an important element of the ACA. SHOPs are designed to offer a new mechanism by which small employers can buy health coverage, making it easier and more affordable for small businesses to cover workers.

Employee-sponsored benefits play an important role in attracting and retaining qualified workers, and one reason why employee turnover is so high among small businesses.

Historically, small businesses have been charged as much as 10 percent to 18 percent more for the same benefits as large employers, in part because of limited competition in the small group market, according to HHS.

From the supply side, health insurance carriers often find serving the small group market less profitable than the large group market. With fewer carriers competing for small business accounts in a market, the price of coverage goes higher.

From the demand side, small-business owners in the past have declined to even offer health coverage because it’s too expensive or because employees never stay long enough to make offering such benefits worthwhile.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.