PROVIDENCE – The availability of the Small Business Health Options Program, or SHOP, a component of the health benefits exchange in Rhode Island, should be expanded to businesses with more employees, the Rhode Island Public Expenditure Council said in a report released Wednesday afternoon.
As it stands, SHOP offers a “differentiated point of access to the health insurance marketplace” for Rhode Island businesses with 50 or fewer employees. Although businesses that employ 50 or fewer people are not required to offer health coverage, there are certain federal tax incentives to those companies that do offer insurance to their employees.
“By restricting Rhode Island’s SHOP to firms with fewer than 50 employees, the exchange may not accommodate the population of businesses with limited economies of scale still required to provide affordable insurance,” said the RIPEC report.
According to RIPEC, nationally, businesses with fewer than 100 employees are eligible for SHOP, versus businesses with 50 or fewer employees in Rhode Island.
“In order to fulfill the overarching aims of the [Affordable Care Act] to extend affordable health insurance coverage, consideration for expansion to up to 100 employees will be crucial to the success of SHOP in Rhode Island,” said the report.
The report mentioned that the expansion may happen automatically in 2016 when federal regulations trump state laws related to Affordable Care Act implementation. Still, at least until 2016, only Rhode Island businesses with 50 or fewer employees will be able to enroll. Rhode Island’s SHOP coverage will be effective beginning Jan. 1, 2014.
Under Rhode Island’s current eligibility standards, 96.2 percent of Rhode Island firms, which employ roughly 40.4 percent of the state, will be able to access SHOP. Two percent of Rhode Island businesses employ between 50 and 99 employees (accounting for an additional 11.6 percent of the state’s workforce) and the remaining 1.8 percent of companies in the Ocean State employ 100 or more employees.
According to RIPEC, including the 50 to 99 employees segment will affect the design of SHOP, the affordability of plans and the ultimate interest of firms. The report added that it seemed “paradoxical” that businesses required to provide health coverage – those with 50 to 100 employees – would not be able to access SHOP.
“The target population of Rhode Island that is expected to purchase health insurance through SHOP, as a component of the larger statewide health benefits exchange, could benefit from the increased access to affordable and potentially more innovative plans,” said the RIPEC report,
The report added: “If Rhode Island’s exchange seeks to be economically viable and add positive value to the purchasing experience, it must be able to reach a larger pool of customers.”
RIPEC ended its report by mentioning several SHOP-specific issues that “must be reconciled,” including: problems with exchange fees, expansion for businesses with up to 100 employees, a management enrollment process and the fact that improvements in health outcomes, productivity and cost savings must be assessed regularly.