An Obama-era program to change how small businesses insure their employees will be majorly scaled back.
On Monday, President Donald Trump’s administration announced it would gut the Small Business Health Options Program, or SHOP.
As part of the Affordable Care Act, SHOP created an insurance marketplace for small businesses that is similar to Healthcare.gov. And while SHOP was never a very popular program that had its own troubles, it ended up spurring private insurers to make changes to the way they provide insurance to small businesses.
Employees at local barbecue restaurant Feast were some of the newly insured who benefited from SHOP -- although not directly. Feast is owned by HiCotton Hospitality, a local company that also owns Royals Hot Chicken and a soon-to-be-opened bar.
In 2014, the company's director of operations, Margaret Lawrence, saw the creation of SHOP and the small business tax credits for purchase as a sign. She’s a pastry chef by trade, but in 2014 she found herself scrutinizing HiCotton’s options for buying employees’ health insurance.
“Especially since we’re in the service industry, [where] it’s unusual for people to have the opportunity to have health insurance, we wanted to make sure we could provide that, but we also had to make sure we were in a financial position to do that,” Lawrence said.
Workers in the restaurant business have always had low rates of health insurance enrollment. That’s partly because insurance is expensive. But it’s even more expensive for small businesses like HiCotton, which don’t have the same leverage to get the same rates large employers do.
For help, Lawrence called an expert: Misty Bierbaum, an insurance sales executive at Kiely Hines & Associates in Louisville. Bierbaum started took a test run through SHOP.
“I wasn’t real impressed with it,” Bierbaum said. “It was just a third party, and to get changes, any kind of billing issue, you just had the extra person involved to make the process take longer, and there is more room for error.”
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The problems Bierbaum ran into were happening across the country.
President Obama’s administration poured resources into getting Healthcare.gov working, and the necessary technical work for the small business insurance project lagged.
Those problems included a streamlined capability of paying all employee premiums at once, instead of insurer by insurer. Another was a delay in letting employees sign up for whatever plan they wanted, no matter what insurer it was.
HiCotton ended up getting health coverage from a private insurance company for its employees. And overall, a very small percentage of small businesses around the country ended up using SHOP. That’s one of the reasons President Trump’s administration cited earlier this week as factoring into the decision to scale the program back.
But SHOP did a few things well, too. It didn’t allow insurance companies to cancel coverage for a set of employees because an employee gets older or sick. There were also controls on how much premiums can go up.
And SHOP was all online. This prompted private insurers to compete with the government’s program, said David Chase with the advocacy group Small Business Majority.
“Before the ACA, small business enrolled all through paper or fax machines. In 2014, that’s how you enrolled your small business. So the SHOP exchange, the fact it existed and has online comparison, it forced the rest of the market to upgrade their technology and bring their small group technology into the 21st century,” Chase said. “The fact that it’s there changes the market and influences how other carriers sell their products.”
The changes SHOP brought, even if it fades into historical record, indirectly helped employees at Feast get insurance. There are now 46 employees enrolled. Now, Lawrence, said whether they use it is another question.
