Administration Must Apply a Rigorous Standard When Determining States' Requests to Delay Employee Choice Feature of Healthcare Marketplaces

According to HHS regulations, states must provide concrete evidence that implementing employee choice would cause adverse selection and raise prices in order to be granted a one-year delay.

Most of the letters submitted by states to opt-out of employee choice for an additional year do not fulfill the criteria required by the Department of Health and Human Services. As HHS reviews these letters, we urge them to ensure states meet the requirement to grant an extension, and if they do not, deny the requests.

HHS's regulation explicitly states that in order to delay the implementation of employee choice a state's insurance commissioner must clearly demonstrate that the choice feature would substantially increase costs for small businesses across the board. Small Business Majority has obtained the letters of more than 10 of the requesting states, and most do not meet the minimum standard.

Employee choice is a critical element of the small business health insurance marketplaces. Small business owners want their employees to be able to choose among multiple insurance carriers when picking a health plan. In fact, the Affordable Care Act clearly requires this feature. The final rule allowing states to possibly opt out of it for yet another year could harm small businesses by putting them at a competitive disadvantage to big businesses that are able to offer a choice of plans to their employees. In states where the small business marketplaces are being run by the federal government, allowing for further delays in this feature also puts small businesses in those states at a competitive disadvantage to small employers in states whose marketplaces have employee choice. What's more, this component is key in distinguishing the new insurance marketplaces from the outside health insurance market.

Many of the requests do not meet the criteria set out in the regulations recently released by HHS. We expect the Administration to apply a rigorous standard when determining whether a state can delay this feature. Absent making this compelling case, we expect that a state's request to delay the implementation of employee choice in 2015 will be denied.

Small employers have been looking forward to offering more comprehensive health coverage that offers more choices so their employees can choose the plan that works best for them. Allowing states to possibly delay the employee choice option from the health marketplaces doesn't do our primary job creators any favors. We urge the Administration to be judicious when determining if states can postpone this feature so small employers and their workers can benefit from the same health insurance choices that larger companies have had for years.

To see an analysis of some of the letters submitted to HHS, please visit: http://www.smallbusinessmajority.org/_docs/letters/State-by-State-Analysis-of-Letters-Requesting-to-Delay-Employee-Choice.pdf