Implementation of the Small Business Health Options Program: Challenges and Recommendations

Abstract

This paper examines the Small Business Health Options Program (SHOP), a part of the Patient Protection and Affordable Care Act (ACA) signed into law by President Obama in March 2010. The goals of this paper are the following: 1) to contribute to a greater understanding of SHOP’s goals and the challenges being faced by the program as it is implemented across the country; and, 2) to make recommendations based on these observations as states move forward with the implementation process. Broken down into four parts, the paper is organized as follows: 1. INTRODUCTION: This section provides an overview of the ACA, describes the special role of small businesses in the United States’ political narrative, and defines SHOP as a “new program that simplifies the process of buying health insurance for small businesses. In 2014, SHOP helps employers with 50 or fewer full-time employees shop for, choose, and offer their employees high quality private health plans that fit their needs and budget.” 2. THE SMALL BUSINESS HEALTH OPTIONS PROGRAM (SHOP): This section provides an overview of the problems, such as high premium costs, that prompted Congress to act on behalf of small businesses—first through the failed SHOP Act of 2008 and then through the ACA. Furthermore, this section describes the ACA’s American Health Benefit Exchanges, which closely parallel the functions of the SHOP exchanges. Lastly and most importantly, this section outlines the four features—employee choice, lower costs through tax credits, defined contribution, and administrative simplification—that make the SHOP exchanges valuable to small businesses. 3. EVALUATING THE SHOP EXCHANGES: This section describes the numerous challenges that are being faced by both the federally-run and state-run SHOP exchanges. Rather than provide in depth coverage of two or three states, this section provides a large sample of SHOP implementation issues at both the federal and state level. 4. CONCLUSION: This section summarizes part three above and provides two recommendations as the states move forward in the SHOP exchange implementation process: 1) Give business owners and insurers—as well as other interested parties—a realistic and frank idea of the expected implementation trajectory. Ask for patience and do not sugarcoat the issues. 2) Clarify the role of the SHOP exchange and market its four-part value proposition in order to boost enrollment and fulfill the program’s goals.