Small Businesses Left Behind In Obamacare

By John McManus, president and founder, The McManus Group

The disastrous rollout of Healthcare.com for individuals attempting to purchase health insurance in Obamacare’s exchange is well-known, but a similar experience is still ongoing for small businesses. I experienced it myself this past month.

Like many small business owners, I was dismayed by the dramatic cost escalation of providing healthcare coverage for my employees. According to a recent survey by Morgan Stanley, average premiums for the small group market increased 588 percent in Washington, 66 percent in Pennsylvania, 37 percent in California, and 34 percent in Indiana. For my firm, premiums increased 35 percent effective this September for the identical coverage. I didn’t know whether to blame the medical device tax, benefit mandates, or other insurance rules that Obamacare has inflicted on the small group market.

Nonetheless, I decided to pursue a better deal through Obamacare’s Small Business Health Options Program, better known as the SHOP Exchange, which caters to businesses with 50 or fewer employees. To my surprise, what should have been a simple task — researching coverage and premiums options on the “DC Health Link” website — was ridiculously challenging.

Benefit summaries were readily available, but discovering the premium costs associated with those plans required establishing an online account and providing detailed information on my employees and their families. After nearly finishing the tedious and invasive online account, technical glitches repeatedly prevented its completion, and the site failed to save any of the data entered on previous pages. Large letters blazed across the screen: “Application Error.” This song and dance continued for nearly a week, requiring repetitive input of previous information.

After a week of little progress, we decided to call a “navigator” — might as well make use of the $130 million in federal funds doled out to these exchange assistants in the last 18 months. With a navigator’s support, the online account process was eventually completed. But once inside the portal, technical problems persisted. Time and time again, after clicking on the “search for plans” icon, the site would freeze. The SHOP exchange is nearly as dysfunctional as Healthcare.com when it was activated last October!

The navigator explained that because of these technical glitches, my firm not only missed the deadline for an October 1 enrollment date, but was dangerously close to missing November’s deadline. She noted these problems were system-wide, impacting all of her clients.

But not to worry, she said; we could have my application expedited. “Expedited? Because of the glitches?” No, not that. The navigator confided the administration was happy to expedite the application of one client because he posted his exchange complaints on Twitter. Another unhappy client’s application was accelerated because he claimed to have a contact at the Wall Street Journal.

I don’t have a Twitter account (though my tween kids seem fixated on tracking the number of followers they have on their accounts) and wondered whether informing her of my monthly column in Life Science Leader could prompt better service. Fortunately, I didn’t have to play that trump card, as the exchange portal eventually worked long enough to obtain a few quotes.

But all that invested time appeared to be wasted when I discovered that plans with similar premiums had significantly inferior benefit packages — gargantuan deductibles and much narrower networks. No plan was substantially cheaper than my current plan. All of the hassle and headache, only to learn my current 35 percent-price-increased-plan may be the best option.

My experience is not unique. In August, the left-leaning Urban Institute issued a scathing analysis of the SHOP exchange experience in eight states, noting that “IT problems were sufficiently serious that they all but prohibited enrollment. ... In Maryland and Oregon, major IT problems created tremendous barriers for SHOP enrollment, no online enrollment was available, and SHOP plans could only be obtained via brokers and without employee choice.”

In fact, 18 states have postponed its full implementation until 2016. New York’s marketplace covers almost one million people, but only 10,000 of those are signed up for small business plans. And in California, a mere 1,200 of the state’s 700,000 small businesses have enrolled on the SHOP exchange, covering less than 5,000 people. California began offering online enrollment last November, but after applicants encountered error messages and page-loading delays, the online portal was suspended in February with plans to launch a new portal from scratch this fall.

While Washington policy wonks are aflutter about the healthcare inflation deceleration and modest premium increases in the large group market, and politicians focus on the botched rollout in the individual market, the small group market’s turmoil has been all but ignored. Premium escalation is at all-time highs in many states, and Washington’s solution — the SHOP Exchange — is totally dysfunctional. The administration has been virtually mum about addressing this crisis but proudly rolled out its breakthrough decision to cover sexchange operations for Medicare’s seniors (average age 76), determining them to be “reasonable and necessary.”

Fortunately, some new thinking is under way. The Coalition for Affordable Healthcare — composed of business groups, insurers, and providers — is working with several prominent members in Congress on model legislation that could provide some relief. A key provision would overturn a treasury regulation that prohibits employer pretax contributions to employees for the purchase of coverage in the individual or private exchange markets. Another provision would permit the sale of more affordable plans than the current 60 percent actuarial value requirement of the “bronze” plan. A third provision would inform individuals if their plan qualifies for an accompanying health savings account.

Let’s hope Congress can move some of these ideas forward and develop other proposals to cut small businesses’ health costs. Government solutions clearly are not working. I found out the hard way.

Lindsay Bealor contributed to this article.