Covered California, the state's health insurance exchange, announced plans and premiums for its Small Business Health Options Program -- or SHOP -- Thursday afternoon. Six health insurers were selected for the marketplace. While some are regional insurers only, Covered California Executive Director Peter Lee said businesses in many parts of California should have a choice of four or more plans.
Lee said rates for the plans, starting in 2014, will be comparable with current rates or "in many cases" lower than they are now. "With the SHOP program," Lee told reporters in a conference call, "we're offering ... a combination of choice and standard benefits for small businesses to offer (health insurance) on par with what large employers do, but without paying additional fees. This is a game leveler."
Lee noted that small businesses -- defined as fewer than 50 employees -- are not required to provide health insurance under the Affordable Care Act. But businesses that wish to provide insurance may be eligible for subsidies to purchase it. That subsidy is available now. It's currently 35 percent and goes up to 50 percent of the premium on Jan. 1. Small business owners who want to take advantage must purchase health insurance through the SHOP marketplace.
Larry Levitt, senior vice president at the Kaiser Family Foundation and an expert on the health insurance marketplace, said he wasn't surprised that the rates are fairly comparable to today. That's because many market reforms already have been instituted, such as guaranteed issue, where insurers are required to take all applicants, regardless of health status.
Still, Levitt was surprised by the variation in premiums for employees of different ages in different regions of California. "Premiums can vary by, easily, 20 percent across insurers," he noted. But, SHOP "will offer more choice to workers and small business, and hopefully put more price pressure on insurers as well," he said.
John Arensmeyer, founder of Small Business Majority, said the major advantage of SHOP is that it will give small businesses access to more plans. Under SHOP, the employer will pick a level of coverage and employees can pick any plan at that level. "That's something you can't get today and you can't get on the outside market," Arensmeyer said. "That's something that big business employees get where there's a whole range of products. ... Employees will be able to have choice and employers won't have to worry about which employees are going to choose which products.
The six carriers offered on SHOP are:
- Blue Shield of California
- Chinese Community Health Plan
- Health Net
- Kaiser Permanente
- Sharp Health Plan
- Western Health Advantage
Small business owners may enroll in health insurance on the SHOP marketplace starting Oct. 1. Coverage will take effect Jan. 1.
Polly Stryker contributed to this report.