Implementing Health Reform. Although the Affordable Care Act's individual health insurance marketplaces have received far more attention, the ACA also created Small Business Health Options (SHOP) marketplaces, where small businesses and their employees can purchase insurance coverage. The SHOP marketplaces were intended to be operated through an online portal like the individual marketplaces. Small employers would go online and identify a qualified health plan or set plans in which their employees could then enroll in online for coverage.
Although the SHOP program was launched in 2014, during the first year the federal online portal was not operational. Small employers and their employees instead enrolled directly with insurers, although the SHOP exchange determined eligibility for small employer tax credits. The Federal SHOP (FF-SHOP) opened an online portal in 2015 and in some states allowed employees the choice of multiple plans at a single metal level (horizontal choice). In 2016 horizontal choice became available in all states in the FF-SHOP. For 2017, the FF-SHOP will make available vertical choice, through which employees will be able to select plans from a single insurer at more than one metal level in states that do not oppose it.
Four states, however-Idaho, Hawaii, Oregon, and Vermont-have not yet offered online enrollment in their state-based SHOP marketplace. In these states the employer continues to apply for an eligibility determination through the state-based SHOP, but employers and employees enroll directly with an insurer in a SHOP qualified health plan. The Centers for Medicare and Medicaid Services (CMS) have allowed direct enrollment to continue in these states for 2015 and 2016 on a transitional basis.
Guidance Extends Option Of Direct SHOP Enrollment Through Insurers For Two More Years
On April 18, 2018, CMS released a guidance extending the option of direct enrollment for these states for two more years, 2017 and 2018. The guidance encourages direct enrollment states, however, to offer employees horizontal and vertical choice and also to continue allowing employers to apply for small business health care tax credits through the state-based SHOP.
The guidance also clearly requires, however, that states must make online enrollment available for 2019. States have three options for doing this. First they may use the FF-SHOP electronic platform to perform SHOP eligibility and enrollment functions for their state marketplace even though they continue to operate their own online platform for their individual marketplace. States that intend to take this route must give CMS notice nine months before the transition. Second, states may use the SHOP online platforms of other states or of other insurance programs operating in the state. They could, for example, use a private exchange.
1332 Stave Innovation Waiver Option
Third, states may apply to the Department of Health and Human Services (HHS) and Treasury for a 1332 state innovation waiver to waive the online functionality requirement. Section 1332 allows a state to waive certain ACA requirements as long as the state's alternative approach to health reform will provide coverage to a comparable number of residents, provide access to health coverage that is at least as comprehensive, and provide access to health coverage that is at least as affordable as would be the case absent the waiver, and will not increase the federal deficit.
The discussion of the 1332 waiver possibility is the most interesting contribution of the guidance as it provides a bit more information than has previously been available as to how the baseline will be defined for waiver applications. Section 1332 waiver applications must provide economic and actuarial analysis to compare expected coverage, comprehensiveness, affordability, and federal cost outcomes under the proposed waiver to what would happen under the ACA without the waiver - that is, to the baseline.
Under the guidance, states that do not use online enrollment for 2017 and 2018 should use a baseline for those years assuming the absence of an online portal, as they are allowed to continue without an online portal for those years under the transitional guidance. For 2019 and later years, however, states must use a baseline that assumes the availability of an online portal. A state would, for example, have to demonstrate in its waiver application that its small group enrollment approach would enroll at least as many individuals as would have been enrolled through an online enrollment portal. Presumably as HHS and Treasury consider other 1332 waiver applications they will also need to define the appropriate baseline considering the circumstances of particular states.
The guidance notes the success of the online portal for enrolling individuals in the individual market. However, it also recognizes that small group markets are different from the individual market, and that particular state circumstances, such as participation requirements or the role of agents and brokers, may lead to different results. Thus state waiver applications will need to consider the particular circumstances of the small group market in the particular state. State waiver applications must be submitted considering the waiver guidance issued late last year, as well as the 1332 application requirement rule released in 2012.
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