Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (HHS), recently announced policies meant to help states in establishing their Affordable Insurance Exchanges under the Patient Protection and Affordable Care Act (PPACA).
Scheduled to open to consumers and small businesses in 2014, these exchanges are meant to be designed by the states to meet their own residents' needs, since coverage and other factors vary. After examining proposals and working with insurance stakeholders, HHS released a final rule to provide a framework for states, meant to help them create their exchanges.
The rule allows states to determine whether their exchange will be operated by a public agency or nonprofit organization, choose a method of selecting health plans to participate and leaves the option of partnering with HHS to implement key functions. HHS also states that the final rule gives states more flexibility than initial proposals in a number of ways besides these, such as leaving more flexibility in the process of determining eligibility.
HHS indicates that the final rule will make it easier to purchase coverage through the Small Business Health Options Program (SHOP), simplify issues for health plans that wish to participate in the exchanges and add to consumer protections. Some aspects of this new rule are still open to public comment, so any party wishing to examine or influence the direction of exchanges still has a chance.
Research supported by The Commonwealth Fund suggests SHOP will help small businesses cover nearly 10 million additional employees, not counting the consumers who would buy personal coverage through the exchanges established by the PPACA.
"SHOP exchanges have the potential to transform the experience of small businesses and their employees when shopping for and administering health insurance," said Sara Collins, vice president for Affordable Health Insurance at The Commonwealth Fund.
Besides affordability, small businesses may be most concerned with efficiency and administrative costs. The latter are typically more of a burden for smaller companies than larger employers. If exchanges are successful in reducing not only insurance premium costs but also the expense of employee benefit plan administration, then small businesses will eagerly participate, Massachusetts Connector exchange founding director Jon Kingsdale recently wrote.
An effective exchange would give employees at smaller companies access to higher-quality health plans at lower costs than they have experienced in the past, according to Kingsdale. They would also see a wider variety of options than most small employers can afford to make available in the current market.
