Small Business Insurance Exchanges Front and Center in Congress

The Affordable Care Act creates a large amount of requirements for individuals and even small business owners nationwide, but now some of those mandates are in the middle of a political controversy. Specifically, the small business insurance exchanges put into place by the ACA have drawn the ire of a number of Republican lawmakers.

While the healthcare law creates health insurance exchanges specifically for small businesses to help some deal with the coverage mandate (which states that those employing 50 or more workers logging 30-plus hours per week must provide them with healthcare options), a number of GOP lawmakers recently asked U.S. Secretary of Health and Human Services Kathleen Sebelius to clarify that participation in them was not mandatory for these companies, according to a report from Modern Healthcare. The request was sent by Reps. Darrell Issa of California, and both Jim Jordan and James Lankford of Ohio.

Issa, who chairs the House Oversight and Government Reform Committee, wrote that requirements in both Washington, D.C., and Vermont seem to mandate that companies and consumers like enroll in their own public insurance exchanges, meaning that it might be difficult or even impossible for them to buy coverage from other sources, the report said. This, the lawmakers argued, essentially serves to limit choice among small businesses and individuals, and does not represent fair business practices. They also noted that the requirement may be particularly problematic for small businesses which have to enroll in the Small Business Health Options Program, or SHOP, exchanges, because of the cost that they might have to pay if they're not able to explore all their available options.

"Based upon a straightforward reading of the statute, plans by D.C. and Vermont to restrict access to the insurance market outside the exchange violate the principle of voluntary participation in exchanges that was codified in PPACA and reaffirmed in your guidance when you wrote that 'participation in a SHOP (exchange) is strictly voluntary for small employers," the letter said, according to the site.

Potential problems with these contentions?
However, it should be noted that under the ACA, states which have chosen to run their own exchanges, rather than doing so with the help of the federal government, will typically have a lot more leeway with how they're able to implement these marketplaces and require people and businesses alike to participate in them, the report said. While some state-run exchanges are only going to allow companies with fewer than 50 full-time workers to participate, others, including Vermont's, will allow companies with less than 100 such workers to participate. In addition, that kind of state-by-state flexibility in the ability to run their own exchanges was something that many Republican lawmakers wanted to be included in the bill when it was first being drawn up in Congress a few years ago.

Further, it's important to keep in mind that in many cases, states are seeing wide disparities in the number of insurance companies that want to actually participate in their exchanges, the report said. Some are seeing as few as a handful of insurers getting into individual or SHOP exchanges, compared with a far larger number in other states, and some in Washington say that difference likewise should lend itself to more flexibility for states, not less.

Small business owners may want to look into their insurance options going forward, not only for healthcare, but also for general liability insurance and other types of coverage they might need. By doing so, they may find ways to reduce costs and improve the overall financial health of their companies.