State Healthcare Exchange Struggles to Attract Businesses

State government is again targeting Connecticut’s employer-sponsored health insurance market.

Access Health CT, the state’s healthcare exchange program, wants more funding to attract businesses to its struggling Small Business Health Options Program, known as SHOP.

The funding reportedly will be used to hire six new client relationship managers, who would market SHOP offerings to brokers and small businesses.

Access Health also hopes to shift its marketing approach and rebrand itself to appear more as a mutual partner than a state obligation.

However, the numbers insinuate it’s an obligation.

While Access Health performs well in the individual market, covering nearly 110,000 lives, the SHOP program has failed to meet projections.

After nearly five years in operation, fewer than 400 small businesses, representing 1,382 lives, participate in SHOP—less than 1% of Connecticut’s small group market.

Service, Technical Issues

A report commissioned by Access Health found the SHOP program is plagued by insufficient incentives, poor customer service, and technical glitches, while often being viewed as a competitor rather than a partner.

For instance, the federal tax incentives offered by the exchange are usually viewed as not worth it by small employers, as they only last two years and exclude firms that pay average annual salaries exceeding $50,000.

“Stakeholders appear to view [Access Health] as a nuisance that must be tolerated because it is the law rather than as a strategic partner that enhances their business operations,” the report said.

A report found the program is plagued by insufficient incentives, poor customer service, and technical glitches.

Unfortunately, that low enrollment could mean higher costs for Connecticut residents.

The exchange is funded by a flat assessment fee on all insurance companies offering fully-insured small group and individual health plans in the state, increasing the costs consumers pay for those plans.

Those assessments exceeded $30 million in 2018.

Market Shifts

While Access Health may see a slight increase in SHOP enrollment by implementing a strategic plan and a new sales force, they are not accounting for the deviation in the group marketplace.

Since the enactment of the Affordable Care Act, the small and large group markets have transitioned from the fully-insured market to the self-insured market.

The exchange is funded by fees on insurance companies, increasing consumer healthcare costs.

This shift is largely due to the stringent mandates the ACA requires for fully-insured plans that are not required for self-insured plans.

Self-insured plans can cost between 5% and 25% less than plans offered in the fully-insured market, which are the same plans offered on the exchange.

Currently, the self-insured market accounts for approximately 65% of employer-sponsored plans, with the other 35% remaining in the fully-insured market.

Increased Risk

Low enrollment in SHOP exposes the markets to increased risk, which can sometimes be costly, but covering more lives under the plan would not benefit SHOP financially, either.

Will this increased funding mean even higher assessments and higher premiums for the vast majority of those in the small group market?

Pouring additional funding into a program that’s attracted such low enrollment is not the answer.

Or will it mean shifting dollars from the individual exchange affecting the services they offer?

As the administration and legislature search for ways to alleviate healthcare costs for small businesses, Access Health continues to seek assessment increases, which directly drive up healthcare costs.

And, in this case, pouring additional funding into a program that’s attracted such low enrollment is not the answer.

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For more information, contact CBIA’s Michelle Rakebrand (860.244.1921) | @MRakebrand