Small Business Health Insurance: Missing the Point

The Centers for Medicare and Medicaid Services (CMS) issued a press release on 15 May, mark_twain_congress_quote-511892offering new ways for small businesses to enroll in health insurance in addition to the SHOP marketplace provided by the ACA. The release also took the opportunity to make some partisan jabs at the ACA and the low rate of participation by small businesses in SHOP.

As an agent certified in SHOP, the CMS press release shows a complete misunderstanding of the problem. Think of the choices businesses face:

  1. You can buy policies for your employees at full price through SHOP.
  2. You can reimburse employee costs for purchasing subsidized health insurance by using an HRA and or HSA  as revised in December.
  3. You can buy much lower  cost policies using a hybrid self-insured approach.

The first method provides no financial incentives — so why do it?

The new options offered by CMS provide no financial incentives — so why do them either?

However, for CMS now to say that the ACA has been ineffective in serving small business is unfounded. CMS doesn’t in fact know how many businesses have chose Option 2.

Of course, the virtue of Option 3 is that politicians have nothing to do with it.

The major barriers facing most business owners with options 2 or 3 is awareness — they don’t know these options have been available.  However, they are, and they could save a lot of money.

Only politicians could design a program with no value and then wonder why no one is using it.


Sources:  Centers for Medicare and Medicaid Services Offers New Health Coverage Enrollment Option for Small Business, Press release, 15 May 2017.