MNsure has missed big on one of its original selling points: getting more small businesses to offer insurance to employees.
The government-run marketplace was expected to cover 155,000 people in small group plans by next year. That number was 1,405 earlier this month.
Insurance agents who connect small firms with coverage say several factors are at play, including a MNsure system they call slow and cumbersome. Steps that still can’t be done online are burdensome.
“We don’t have that kind of time,” said Sheryl Frieman, an agent with Array Insurance in Golden Valley who calls herself a supporter of the federal health law. “If I don’t use it, no one is going to use it.”
Minnesota created the MNsure exchange in 2013 to implement the Affordable Care Act, which called for new government-run health insurance marketplaces in all 50 states.
With its troubled launch in late 2013, the Minnesota exchange opted to first fix technical problems for individual users. The system is better now, but still needs significant work for people enrolling in public health insurance through MNsure.
Those groups have alternatives for obtaining coverage, but MNsure says it has a plan to grow small business enrollment.
“We agree that [enrollment is] modest at this point, but there’s opportunity for growth,” said Katie Burns, the MNsure chief operating officer.
Jon Gabel, a health policy researcher at the University of Chicago, says other states are struggling with similar issues.
“They’ve got to get broker buy-in,” Gabel said. “From our surveys, maybe 35 percent or so of small employers are aware of the [exchanges], and it’s similar for the tax credits.”
Most of the attention on exchanges has focused on marketplaces for individuals, who can tap sizable tax credits when buying non-group coverage on an exchange.
But the health law also created the Small Business Health Options Program — called SHOP for short — to improve the insurance market for firms with 50 or fewer employees.
Whereas almost all employers with 1,000 or more workers offer health insurance, the rate is less than 50 percent among small groups — and the gap is widening.
“There’s been a broad concern about deterioration and declining participation among smaller employers, and it is fundamentally related to market leverage — they don’t have the market leverage to command the best deals in the marketplace,” said Joel Ario, managing director with Manatt Health Solutions and previously the top Obama administration official for developing health exchanges.
In April, the trade group for Minnesota’s nonprofit health insurers reported that the number of people covered through small group plans dropped by more than 16 percent in 2014, the steepest year-over-year decline in a decade.
The decline apparently didn’t boost the state’s uninsured rate, which fell to about 5 percent last year. Small groups that dropped health plans tended to direct workers to the non-group market, insurers said.
Small group plans covered 289,590 people in the state last year, according to the Minnesota Council of Health Plans, which means the MNsure share was less than 1 percent.
“It’s not the case that a broker can go in and do the entire enrollment process online for the small employer,” said MNsure’s Burns. ”There are pieces of it that need to be done offline.”
In the coming year, MNsure expects to put more resources into publicizing the program for small businesses, Burns said. Starting next year, the definition for eligible small groups should increase to those with 51 to 100 workers — potentially expanding the pool of firms shopping through the exchange.
Small businesses buying through MNsure can let workers select from all health plan options being sold through the government-run marketplace, Burns said. Traditionally, workers in small group plans haven’t had many choices in coverage.
But even with those selling points, Burns acknowledged repeated complaints from insurance agents. The exchange has had to focus resources, she said, on people who use the exchange for non-group coverage.
In November, the U.S. Government Accountability Office examined enrollment through SHOP exchanges in 18 states and concluded that sign-ups have been “significantly lower than expected.”
Across the country, many SHOP exchanges have ongoing technical challenges and administrative burdens that discourage agents from recommending the marketplaces to small business clients, according to GAO. Stakeholders told the government that tax credits available for small groups buying on SHOP exchanges aren’t providing a big enough incentive.
“Those tax credits are so nebulous,” said Dave Wiest, president of EMEX Benefits, an insurance agency in Medina. “They’re hard to get. And when they’re available, they’re so low they’re all but useless.”
Projections presented to the Legislature in early 2013 had forecast 155,000 people covered through small group policies purchased on MNsure by 2016. Those sign-ups were part of a projected 452,000 commercial enrollees buying through the exchange by next year.
As of mid-May, 64,000 people had signed up private insurance policies through the exchange, including 1,405 people in SHOP policies. MNsure now expects 95,000 commercial enrollees by the end of 2016 — a reduction that has forced cuts in operating costs, because the exchange is funded by withholding a portion of premium revenue.
Republicans at the Capitol have seized on the enrollment numbers, questioning MNsure’s sustainability. Earlier this month, lawmakers directed the state to develop a proposal so small businesses could obtain tax credits when buying coverage outside MNsure.
When Gov. Mark Dayton launched a task force in 2011 to develop plans for an exchange in Minnesota, Dan Schmidt was one of the key representatives for small businesses.
The new marketplace promised small groups the chance to easily see the cost of coverage from competing carriers, Schmidt said. But more than a year after MNsure’s launch, he’s stayed with his insurance agent and stayed out of the SHOP exchange.
“They left the brokers out on a limb,” said Schmidt, who is vice president with Great River Office Products in St. Paul. “They didn’t incorporate them as a resource into MNsure itself.”
The lack of broker buy-in and burdensome enrollment processes are “major impediments to success” for many small business exchanges, according to a recent HealthAffairs study published in part by Gabel of the University of Chicago. The study noted that brokers may view the SHOPs as “business and political adversaries.”
The employee choice features offered by government-run exchanges have become less of a selling point, Gabel said in an interview, with the rise of private exchanges that offer similar services. Plus, fewer carriers have been selling small group policies on exchanges compared with off-exchange markets.
Despite the challenges, Gabel said it’s too early to write an obituary for the SHOPs.
“When innovations in health insurance begin, change is not instantaneous,” Gabel said. “It takes a long time.”