04/04/2013 02:03 pm ET

Small Business Obamacare Delay Means Fewer Choices For Workers

Workers at small companies may have to wait another year to take advantage of one of health care reform's biggest selling points.

As The New York Times first reported, President Barack Obama's administration is delaying until 2015 an Obamacare provision that will enable workers at small businesses to choose their own health insurance plans rather than have their employers select for them. The administration cited "operational challenges" as the reason for the delay.

Contrary to reports by Fox News and others, however, the administration and states will still establish health insurance marketplaces, called SHOP exchanges, that will allow companies with up to 100 workers to comparison-shop for health benefits next year.

Allowing employees of small firms an array of health plans will provide them with the same options often available to people who work at larger businesses. The delay means these workers won't have that choice as soon as Congress intended, which could undercut efforts to reduce the high percentage of people who work at small companies who are uninsured.

The postponement, announced last month, marks a setback for the administration as it rushes to get the health care law's biggest benefits online by Oct. 1, when health insurance exchanges for small companies and for individuals are scheduled to begin selling coverage that will take effect next year.

But it won't change much about how small companies select health insurance for their employees, said Caroline Pearson, a director at the Washington-based consulting company Avalere Health who works on health insurance exchange issues.

"I do not envision that the one-year delay of employee choice is going to substantially alter expectations for enrollment in SHOP exchanges," Pearson said.

Small businesses will still have access to the new exchanges, through which they can compare the benefits and costs of health insurance plans, and that could reduce the administrative burden of choosing workplace health benefits, Pearson said. In some cases, companies could avoid the cost and effort of dealing with an insurance broker by buying coverage directly, she said, and qualifying businesses with fewer than 25 employees can only access tax credits worth up to 50 percent of health insurance costs by using the SHOP exchanges.

Last year, 61 percent of companies with fewer than 200 employees offered health plans to workers, compared to 98 percent of larger firms, according to a survey by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust.

On today's market, small businesses aren't able to secure the volume discounts for health insurance that big companies can get, one reason why employees at smaller companies are less likely to have job-based health benefits. Small companies now typically offer just one plan to workers, so the postponement means employees won't see a change, Pearson said.

Health insurance for small companies also will have to comply with Obamacare rules, including those that guarantee minimum benefits, whether firms buy plans through the SHOP exchanges or elsewhere, Pearson said. Companies with at least 50 full-time employees will have to offer health benefits for 2014 and beyond or face financial penalties under the law.

Pearson said another reason the one-year delay of the employee-choice provision may have little effect is that many small businesses won't buy health benefits on the exchanges anyway and will continue to shop through brokers. And workers may prefer their employers to research and select a health plan rather than doing it themselves, she said.

The federal government will run at least part of the health insurance exchanges for individuals and for small businesses in the 33 states that refused to take on the responsibility, so the delay of the employee-choice provision applies to the state health insurance exchanges under federal control. Seventeen states and the District of Columbia will manage their own exchanges. Some states, including California, Connecticut and Minnesota, aren't putting off this part of the law, while others, including Maryland, will follow the federal government's example.


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