Obamacare’s small-business enrollment slow: Government auditors

Obamacare’s health exchanges set up to serve small businesses have fallen far short of their 2 million-customer enrollment target, government auditors said in a report Thursday that found the federal government and some states may have made the sign-up too difficult.

The Small Business Health Options Programs (SHOPs) were designed to let businesses with 100 or fewer employees — 50 or fewer in some states — buy plans in a special exchange set up just for them, and take advantage of a tax credit for covering their workers.

But as of June 1, just 12,000 employers covering just 76,000 people had signed up in the 18 states that run their own small businesses exchanges, according to the Government Accountability Office.

Data for the 33 states covered by the federal government aren’t available yet, but officials told GAO investigators that their rates aren’t much different than the state-run exchanges, suggesting total enrollment will be well below the 2 million target predicted by congressional scorekeepers as of 2014, rising to 4 million by 2017.

Republicans said the shortfall was proof of Obamacare’s mismanagement.

“Obamacare’s SHOPs have been fraught with errors and high costs from the very beginning,” House Small Business Committee Chairman Sam Graves, Missouri Republican, said.

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Mr. Graves, who requested the GAO study, has highlighted the SHOP program’s struggles for months, repeatedly demanding enrollment figures from the Obama administration to no avail.

The report comes just days after the Obama administration dramatically scaled back expectations for participation in Obamacare’s individual markets, projecting 9-10 million enrollees in 2015 vs. the estimate from the Congressional Budget Office of 13 million.

The GAO said available SHOP data varied dramatically, from about 33,700 people enrolled in Vermont to just one person in Mississippi, although the latter state’s portal did not come online until May.

Auditors listed several issues that suppressed enrollment.

The federal government and some states failed to allow online sign-ups, and both federal and some state officials didn’t meet a requirement that employers let workers in the small enterprises choose from an array of plans, known as “employee choice.”

Eighteen states with federally-run SHOPs are delaying employee choice again in 2016, because insurance commissioners feared it could lead to adverse selection, a phenomenon in which sicker enrollees choose certain plans and drive premiums up.

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Also, some stakeholders reported the tax credit was too small and too complex to entice businesses to sign up; some businesses did not know if SHOP enrollment was open; and some employers took advantage of a carve-out that allowed them — if they had their state regulators’ blessing — to renew plans that do not comply with Obamacare’s coverage requirements through 2016.

The Centers for Medicare and Medicaid Services reported that some states — Maryland, Oregon, California and Mississippi — did not have online SHOP enrollment available or had to take their systems offline between October 2013 and spring of this year.

For its part, the Health and Human Services Department said it has made progress in service improvements and promised a suite of online functions for 2015.

“HHS is committed to improving the Small Business Health Options (SHOP), by acting on lessons learned from the first year of operation,” Jim Esquea, assistant secretary for legislation, told the GAO.