Lost in angry chatter over the roll-out of the Affordable Care Act’s online insurance marketplace is the lackluster performance of "shop exchanges."
The state-administered, small-business insurance marketplaces have attracted just a fraction of eligible companies and have been equally troubled by technology failures, paperwork delays and complaints of poor customer service.
What is a “shop exchange?”
Shop exchanges are insurance marketplaces for businesses with fewer than 50 employees.
Construction of the federal shop exchange has been delayed until November.
But 14 states launched their own websites. Those states include Utah, which created its small business marketplace in 2009 — well before passage of the Affordable Care Act.
But Utah’s shop exchange appears to have benefited from years of trial and error.
Avenue H launched in 2009, well before passage of Obamacare. To date, 473 small employer groups have enrolled their 3,872 employees and dependents, a total of 10,635 policyholders.
It may not seem like much, considering there are roughly 67,000 small business owners in Utah. But as of February, only 14 companies had signed up for Kentucky’s exchange, and 127 for Colorado’s, according to Businessweek.
"We’re seeing a steady increase with 168 new businesses joining this year. That’s more than we had join in the previous two years," Avenue H director Patty Conner said.
Data from 2013 show 62 percent of Avenue H’s customers were previously uninsured.
Customer satisfaction is high; 85 percent of existing customers have renewed their plans, she added, crediting technology upgrades.
"We went from a 90-day enrollment window to less than an hour," Conner said. "We used to require busywork up front and then nobody would buy after seeing rates were too expensive. They can now get rate quotes without having to fill out a lengthy application."
Avenue H’s success could foreshadow a rosier future for other shop exchanges, which, unlike the individual marketplace www.HealthCare.Gov, are open year-round.
"We’ve been doing this for four years. We’ve had our challenges in getting the right technology and fine-tuning things, but what we’ve learned is huge," Conner said. "It’s about picking the right partners. Some states picked technology partners that had never done this before."
Still, health insurance remains a hard sell for small companies. Those with fewer than 50 full-time employees are exempt from the Affordable Care Act’s requirement to have insurance.
And while the smallest businesses qualify for tax breaks, it’s sometimes not enough to make health benefits affordable.
Then, there’s the competition shop exchanges face from the individual marketplace, which offers large subsidies to low-wage workers.
Most of Avenue H’s customers are high-end employers, such as law and accounting firms, Conner said.
A lot hinges on next year’s prices.
Rates for 2014 came in "higher than we expected, but we’re starting to see those trends come back down again," Conner said, noting that two of the 74 health plans available on Avenue H had mid-year price cuts. "But we won’t know until after this summer how rates come out."
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