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SHOP Exchanges Taking a Slice of Small Biz Market

Christopher Cheney, for HealthLeaders Media, March 18, 2014

"For health plans, there remains enormous variability in potential outcomes and adoption rates," Kim said. "Flexibility remains the name of the game to be able to participate without over-committing, yet also without hamstringing efficiency and differentiation… The promise of SHOP is very attractive for small businesses, and it very well may be a significant shift for small and large businesses. At the same time, it is hard to be definitive."

According to Kim, three factors will determine the market impact of the SHOP exchanges:

  • Uncertain market rates for plans available on the exchanges: Rates could mimic premium increases seen in the individual market due to benefit structure requirements; or volume and risk pooling could reduce overall premiums.
  • The attractiveness of medical underwriting for certain industries with lower risk profiles and uncertainty about the negatively self-chosen market that remains.
  • The evolution of private exchanges that may allow more medically underwritten rates at a group level.

"At the same time, much of the sensitivity to pricing and market rates is up to the employers and their perception of hiring and retention competitiveness," he said. "The impact of those considerations remains to be seen."


Christopher Cheney is health plans editor at HealthLeaders Media.
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1 comments on "SHOP Exchanges Taking a Slice of Small Biz Market"


Michael Lujan (3/18/2014 at 4:36 PM)
The value of value will prove itself over time. The first was mostly about enrollment in the individual market. In most states, the small group market was relatively stable with guaranteed coverage for small employers. In CA, we've had something like SHOP since 1993 and still have private exchange products for small groups. If SHOP can offer unique plans (e.g. Medicaid plans normally not offered in the commercial market) and leverage their public exchange platform to also enroll part-time workers not eligible for group coverage... they may have an advantage in the commercial segment. Enrollment in SHOP will grow starting August through Dec 2014 when they begin to capture groups who chose "early renewal" in Q4 2013. So much of this will depend on public exchanges embrace and support of Certified Agents who serve the employer market. Since nearly 90% of small employers work with licensed agents, exchanges would be wise to provide dependable agent support and not work against this important enrollment channel. #AgentsAreTheAnswer