Other than attracting American population with better health insurance coverage at subsidized rates, Obamacare had another central goal – transforming the health insurance mechanism for small employers and their employees. The employer-provided health insurance segment is a primary means of coverage for a large number of the American population, and the state of insurance is not very heartening in this domain. With the Affordable Care Act acting as a catalyst for change, public and private exchanges are seeing a surge in enrollments as employers and employees reconsider their health coverage strategy. Let’s take a look at the outcome of the implementation of law across different systems of employee enrollment.
Public Vs Private Enrollment
A major impact of the implementation of ACA is the change in employer mindset about the logistics of providing health insurance to employees. Employers are outsourcing health insurance benefits management to privately held exchanges after the implementation of the ACA. Due to the newly introduced complexities in the health insurance market, large employers are finding this outsourcing a better tactical approach that would save administrative efforts while cutting costs of managing health insurance for employees. Resonating with the changing mindset, up to 45 percent employers plan to implement a private exchange solution in future. Accenture estimates that 2018 will see private exchange enrollment overtaking public exchange enrollment.
A quick data analysis on this front reveals that Accenture’s study is headed in the right direction. In 2014, we saw 8 million total enrollments coming through public exchanges, while only 1 million were contributed by private exchanges. By 2015, this ratio is expected to drop, showing a 15 million to 9 million favoring public exchanges. However in 2017, we will see a bigger surge from the private exchange side that should bring the two exchanges head to head with 30 million enrollments. By 2018, private exchanges would best public exchange enrollments with 40 million enrollments against 31 million of public exchanges.
With a strong surge expected to hit this market shortly, consulting firms and beneficiaries are already positioning themselves to grab this market. Heavyweights like Aon Hewitt, Towers Watson, and Mercer have already garnered some big name clients, including Darden, Walgreens and retirees from IBM. These private exchanges will enable the large firms to maneuver the uncertainties of the post ACA market through outsourcing.
However, the above data mostly focuses on the way large employers are tackling this new market and trying to make the most of the new market challenges. Most of the large-scale private health exchange providers are focused on catering the requirements of large firms, leaving the small firms to fend for themselves in this period of change. However, Obamacare has been considerate of this two-tier health exchange system formation in the market. A different sort of insurance movement is taking place in the small business sector, and it will be assisted by Obamacare in the coming open enrollment period.
Small Businesses’ Dilemma
Existing private exchanges were not designed to cater to small employers, and the Obama administration understood that when they created the Affordable Care Act. Small employers, which feature up to 50 employees working at least 30 hours a week, comprise nearly 96 percent of all businesses in U.S. These small businesses account for around 34 million workers, a formidable number. Even with these types of numbers, the health coverage picture is pretty bleak here, with most employees not having access to quality health insurance coverage.
As a response to these new challenges, the Affordable Care Act will be opening its Small Business Health Options Program, SHOP, in the coming open enrollment period. [Full disclosure: hCentive will be providing the SHOP exchange] The SHOP exchanges are specifically designed to provide small businesses the ability to buy better health insurance plans for employees. The combined bargaining power of small businesses is channeled through SHOP exchanges, bringing health plans a wider reach that can offset the subsidized costs at which they are selling insurance plans.
Through SHOP exchanges, the administration plans to meet the gaps that exist between large and small business health insurance coverage. In the second part of this post, we will take a look at the shortfall in enrollments between small and large businesses, and will see how Obamacare is going to fill that gap through the SHOP Exchange.