June 26, 2014
The role of small-business employers in the ACA is still “up in the air”.
As originally planned, these employers were to be encouraged to offer subsidized group health insurance to employees through tax incentives and special shopping arrangements on the Exchanges.
The tax incentives were modest, and often were not adequate to offset the potential financial risk seen by small businesses in offering coverage.
The Exchange shopping was to take place through the Small-Business Health Options Program (SHOP). Employers were to be able to log on and choose several group plans to be available to employees. Employees could then log on and select plans.
However, the development of this SHOP capability was shunted aside during the first year, due to enrollment crises for individuals. And the implementation of SHOP for the second-year enrollment (to start November 15, 2014) is lagging behind.
During 2013-2014 enrollment, small-business employers often walled themselves off from implementation of the ACA, concerned about risks and costs. With no immediate mandate to worry about, these employers (with up to 50 employees) were able to adopt a “wait and see” strategy.
From the perspective of the Department of Health and Human Services (HHS), this was largely an acceptable situation. Federal agencies were overwhelmed with developing the federal Exchange, and recruiting individuals to sign up for coverage through the new marketplaces.
A mutual accommodation had been reached with large employers, to postpone their mandate, so a “benign neglect” approach to small-business employers fit into the phased implementation plan that was being put in place for all employers.
Small-business employers were basically put into a waiting mode by HHS, while efforts were directed elsewhere. This was the same strategy that was used with respect to large employers—to arrange for a holding pattern.
In turn, given the general turmoil and concerns over financial risk, many of these employers were satisfied to sit on the sidelines.
The strategy here was thus one of “mutually-agreed postponement of action”.
At present, developmental efforts for the SHOP program on the federal Exchange are focused on offering only one group policy for employees. Multiple selections have been postponed.
And even the capability for this more-limited option may have to be further delayed.
There are bigger problems now brewing with larger employers (with 100 or over employees) and their mandate, which is to become effective in 2015. These employers will soon be faced with “play or pay” decisions, and some backlash is inevitable. For midsized employers (50 to 99 employees), the mandate has been postponed until 2016, so they are under less pressure at present.
As a result of this situation, the SHOP program may remain on the back burner and subject to more slippage.
The delaying strategies for employers are familiar to attorneys, who have long understood that deferred action is sometimes the best way to deal with a potential conflict. If the moment does not seem ripe for grappling with difficult issues, both sides engaged in a potential conflict may be quite willing to wait for the situation to change.
When dealing with small-business employers, attorneys may sometimes feel that an “explain, track, and observe” strategy is best for the moment. Periodic follow-up meetings may be scheduled to keep up the tracking and determine when more engagement would be desirable or necessary.
More information about small-business employers and the ACA may be found in recent books on the ACA and on the health care system, and on the ACA Blog, also written by the author of this series.