Today, Representative Cindy Axne (IA-03) wrote to the Centers for Medicare and Medicaid Services Agency (CMS) to inquire about the agency’s future efforts to improve health insurance options for small businesses, including its efforts to revitalize the Small Business Health Options Program, or STORE.
SHOP, created by the Affordable Care Act, created state and federal exchanges for small employers with 50 or fewer employees to provide high-quality health insurance plans and, for eligible employers, access to the health care tax credit to small businesses. Unfortunately, SHOP is well below the Congressional Budget Office forecast projected participation of 4.6 million employees, reaching less than 10% of this objective. Additionally, twenty-eight of fifty SHOP exchanges currently have no plans available, including the one in Iowa.
Over the years, SHOP was further weakened by rules established by CMS, which allowed the program to move to a “direct enrollment model” that offered less support to small businesses and employees, and removed the obligation for major insurers to participate in the SHOP exchange. to participate in an individual exchange facilitated by the federal government.
In the letter, the Axne rep stresses the importance of SHOP exchanges and asks for more information about how the agency is working to strengthen the program.
“As a small business owner, I know how hard it is to find affordable health care plans, which is why I wrote a letter to CMS to find out what they can do to support more affordable options for small businesses to provide health care for their employees Data shows that less than 60% of the 31.7 million small businesses in the United States offer health benefits, and this “is not enough. Small businesses need to be able to offer health care packages to support their employees and compete with big businesses to attract good workers,” said Representative Axne.
This letter has been endorsed by Main Street Alliance.
“As an organization that advocates for small businesses across the country, the revitalized Small Business Health Options Program (SHOP) is the kind of investment small business owners need to ensure that their employees benefit from optimal health coverage. Especially for true small businesses, those with 20 or fewer employees, SHOP plans are key to making small businesses a strong and competitive option for workers, especially between rising inflation and labor shortages. -work”, said Naomi Smith, political program manager for the Main Street Alliance.
The full letter can be found here and below.
Dear Brooks-LaSure Administrator,
I am writing to seek feedback on potential actions to help small businesses provide health insurance for their employees, including efforts to revitalize the Small Business Health Options Program, or SHOP.
The SHOP was created by the Affordable Care Act to create state and federal marketplaces for small employers (typically businesses or nonprofits with up to 50 employees) to provide employees with a range of qualified health plans. Benefits of the SHOP exchange include access to more affordable, high-quality private health insurance plans and, for eligible entities, access to the Small Business Healthcare Tax Credit. For example, in Massachusetts, small employers and their employees are estimated to have saved an average of 20% over their peers who purchased off-market coverage. Small employers who qualify for the Small Business Health Care Tax Credit can also receive a credit of up to 50% of the employer’s contribution to employee premiums, making the benefit delivery employee health much more accessible and affordable for small employers.
Despite their nationwide establishment, the execution of the SHOP exchange has not lived up to its vision. Twenty-eight of fifty SHOP exchanges have no plans available, leaving small businesses to find plans off the market. Moreover, the SHOP market did not even reach 10% of the expected participation of 4.6 million by the Congressional Budget Office. In fact, the Centers for Medicare & Medicaid Services (CMS) estimates that there were only 27,000 small employers and 233,000 employees using SHOP exchanges across the country in 2017. This level of participation is lackluster, typically representing less than 1% of the overall small group market. Such limited SHOP plan availability and low enrollment point to a major flaw in a key resource for small employers looking to provide health benefits to their employees.
Notably, many past CMS rules have contributed to SHOP’s underperformance. For example, in 2018, CMS moved all Federally Facilitated SHOPs, or FF-SHOPs, to a direct-enrollment model, meaning that FF-SHOPs would only offer assistance in determining eligibility, but would no longer manage employer or employee registration, process premium payments, or manage other SHOP functions., At the time, stakeholders were concerned that this change would not help SHOP exchanges run more efficiently, as then-CMS administrator Verma had hoped, but rather, reduce the choices available to employees of small employers.
However, the SHOP exchange was seriously weakened before this rule. In December 2016, the CMS removed the requirement for large insurers, particularly those with more than 20% of the small group market share, to participate in the SHOP exchange in order to participate in an individual exchange facilitated by the federal government from 2018. Although it was anticipated that the removal of this linked requirement would reduce insurer participation in SHOP exchanges, CMS prioritized the removal of the requirement to enable and promote insurer participation in the individual market.
These two rules reduced the incentives for insurers and therefore employers to participate in the SHOP. They also remain in place despite notable advances in the health insurance market that have allowed the individual market to thrive and may better accommodate SHOP’s participation. Insurers’ participation in the personal market has steadily increased over the years, keeping premiums low in the personal market compared to the employer-sponsored insurance market., In addition, the extension of ACA premium tax credits by the recently signed Cut Inflation Act should further facilitate individual participation and, by extension, incentivize insurers to participate in the individual market. Such a robust individual marketplace may be better positioned for SHOP-related requirements or other incentives that promote growth and participation in SHOP exchanges.
Given that only 58% of the 31.7 million small businesses in the United States offer health benefits – far fewer than the 99% of large companies that do – it is essential to support efforts to better serve small employers. and, by extension, their employees., For this reason, I am contacting you to ask CMS to answer the following questions by November 1:
- How has and how will CMS follow the growth of the SHOP exchange market? What indicators are used to monitor its effectiveness?
- Would have CMS considers reevaluate the impact of a nexus requirement, such as that which previously tied the participation of large insurers in the individual market to the participation of SHOP, in today’s health insurance market?
- If this assessment demonstrates that a linking requirement could successfully promote the insurer’s participation in SHOP without negatively impacting the individual market, would CMS consider future regulation that reinstates a linking requirement?
- Given that state-based, federally-facilitated SHOP exchanges operate on a national scale, are there lessons learned from successful state or federal SHOPs that CMS has observed that policymakers should take into account? account in future legislative efforts?
- What other initiatives is the CMS considering to improve and revitalize the SHOP market?
- Does CMS have any additional actions or suggestions for legislation to help small businesses offer health insurance?
I thank you for your prompt attention to this matter and for your service to our country.