New Small Business Survey Shows Strong Demand For Competitive Health Insurance Exchanges Offering Multiple Options To Employees In California

David Chase

Originally released June 12, 2012:

States across the country are working to develop Small Business Health Options Program (SHOP) exchanges—online marketplaces where small businesses can purchase health insurance. An opinion survey released today provides important new insights into what small businesses in California are looking for from the state exchanges being created under the Affordable Care Act. Topping the list are allowing employees to choose among multiple insurance carriers and more disease prevention and wellness programs. The survey also found interest in the SHOP exchange is high, and awareness among owners of small business tax credits is low.

“Small employers and their employees want the same options and benefits that large companies already enjoy,” said John Arensmeyer, Founder & CEO of Small Business Majority. “Small business owners are eagerly awaiting 2014, when the exchanges will be up and running. These marketplaces will give them more choice of plans and make it easier and more affordable for them to offer their employees insurance.”

The survey, conducted between April 18 and May 6 by the Field Research Corporation on behalf of Small Business Majority and Kaiser Permanente, found that the availability of SHOP exchanges in 2014 could spur more small business owners to provide health benefits to employees. In California, just one in three (32 percent) small businesses currently offer health insurance to their employees and another 4 percent offer it to some of their employees. But, when small business owners are told that California’s exchange opens in 2014 and it will allow them to shop for health insurance among competing companies either online or via a broker, the proportion of those who are likely to offer health coverage to their employees jumps to 44 percent.

“The fact that these exchanges are enticing to small business owners demonstrates the importance of getting them up and running and making sure they offer the features small businesses are looking for,” said Joe Smith, Vice President for Small Business, Kaiser Permanente.

Choice of insurance carriers is important too. Sixty-seven percent of small business owners planning to offer benefits in 2014 want employees to be able to choose between multiple insurance carriers. Along with choices, small businesses are looking for SHOP exchanges to help reduce the administrative burden of providing health insurance. Specifically, they are looking to the SHOP to handle enrollment and provide small business owners with a single, consolidated bill, regardless of the different number of insurance carriers employees select.

“From a business perspective, it’s smart to offer employee health benefits because it makes you a more competitive employer,” said Liz Parker, owner of Tulsa Rib Company in Orange, Calif. “I believe more small business owners would provide coverage if they could afford it. But for my business and many others, costs continue to increase, while our benefits are whittled down. And that’s why reform was necessary. The health exchanges coming in 2014 will not only help contain costs for small businesses, they will also widen the selection of plans available to us. That will make it easier for entrepreneurs to find the plan that’s right for their business, increasing the likelihood that more of them will start providing coverage.”

“State leaders can protect small businesses and the millions they employ by ensuring that SHOP exchanges offer real choices among carriers and that no small business owner is forced to spend more time working on health insurance paperwork than running their business,” Arensmeyer said.

Small business owners also want to offer their employees plans that feature prevention and wellness programs. Among all small employers polled, 48 percent in California said offering a plan with prevention and wellness programs were attractive to them. For those small businesses owners that expect to offer health benefits in 2014, they are even more likely to feel this way (66 percent).

“SHOP exchanges have the opportunity to deliver on the nationwide trend to give employees the resources and tools to stay healthy,” said Smith.

The survey findings also shed some light on recent reports that many small businesses have yet to claim the health benefit tax credit. Fifty-one percent of the small businesses surveyed were not even aware of the tax credits available to them for providing health benefits through the new health reform law. Upon learning about the availability of the tax credit, 58 percent indicated they would be more likely to go to the exchanges in 2014.

Tax credits provide a valuable incentive for small businesses to offer health benefits. The next logical step is to make sure small businesses across the country are aware of these tax credits. This will help ensure a vibrant SHOP exchange.