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Implementing California’s Small Business Health Exchange

On Friday, Small Business Majority hosted its first in a series of forums on implementing California’s small business exchange called “Providing Excellent Insurance at an Appealing Rate.” The panel, moderated by Micah Weinberg of the Bay Area Council, included Terry Gardiner (VP, Policy & Strategy, Small Business Majority), Shawn Nowicki (Health Policy Director, HealthPass New York), and Bill Wehrle (VP, Health Insurance Exchanges, Kaiser Permanente). The purpose of the forum was for panelists to present lessons learned from other exchanges and provide recommendations for creating a successful Small Business Health Option Program (SHOP) in California.

In the past, California has created a variety of purchasing pools, including CalPers (1962-present), MRMIP (1989-present), HIPAC (1992-1998), CalChoice (1996-present), and PacAdvantage (1998-2006). In 2014, California will launch the California Health Benefit Exchange, which will be open to individuals an small employers under 50 full-time employees (will open to 100 after 2016).

The Exchange Board will selectively contract with eligible plans for the Exchange. In order to become a qualified health plan (QHP), plans must offer the Essential Benefits Package, meet marketing requirements, ensure sufficient choice of providers, include community providers, implement quality improvement strategies, present health benefits in a standard format and report data on quality.

The following is a snapshot of California’s current small group market:

Shawn Nowicki shared some of the trends he observed with HealthPass, New York’s small business exchange. HealthPass is a commercial health insurance exchange that started in 1999. It is a joint collaboration between the health insurance industry, the Mayor’s Office of the City of New York, and the Northeast Business Group on Health. HealthPass serves 14 counties, including the 5 buroughs of New York City. They offer coverage to both small businesses and sole proprietors. Because 45% of the people who joined HealthPass were previously uninsured, the Exchange served a much-needed purpose. They found that people all congregated in the same plan at first, but eventually spread out to other plans. They also found that offering the same plans priced a few points below the outside market resulted in a surge of membership (this will not be possible in CA’s exchange since legislation requires that plans be offered at the same price).

Terrie Gardiner and Bill Wehrle shared information about other exchanges. They mentioned that it is important to offer the perfect number of plans. Utah’s small business exchange offered 150+ plans and consumers only signed up for approximately 1/3rd of the offered plans. Massachusetts eventually found that offering 7 products was perfect. It allowed people to compare based on quality and eliminated variation that drives risk selection.

Other small business exchanges have only managed to attract less than 2% of eligible employers. Unfortunately, the tax credit being offered in the SHOP exchange is small and narrowly targeted, so the exchange needs to find ways to attract consumers in other ways.

Based on experiences with previous small business exchanges, the panelists made the following recommendations:

  • A small business exchange has to act as a competitor and bring value to the market;
  • The SHOP has to offer good plan design and carriers that people want (including private carriers and regional carriers);
  • It is important to create an easy experience for the employers;
  • The SHOP must offer something that consumers cannot access elsewhere;
  • It is important to offer what small business want, not what we think they want;
  • Collaboration, especially with health plans, is key;
  • The Exchange has to offer a range of choices that mimics the outside market;
  • The SHOP can also serve an economic function by acting as HR for small businesses; and
  • Brokers are crucial to a successful Exchange – they are knowledgeable and ready to enroll consumers.

The next forum will be held on November 16th. It will focus on SHOP services. Read more about future forums here.

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