Implementation, Design of SHOP will Determine Success

Rhode Island Public Expenditures Council

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Implementation, Design of SHOP will Determine Success

PROVIDENCE – On Wednesday, March 27, the Rhode Island Public Expenditure Council (RIPEC) will release comments on the state’s implementation of the Small Business Health Options Program (SHOP), a component of the health benefits exchange.  The report details the role of SHOP in furthering the goals of the Affordable Care Act (ACA), eligibility requirements, and key considerations related to affordability and access for Rhode Island’s small business owners and employees.  The full report is available here.

While not distinct from the state’s exchange, SHOP offers a differentiated point of access to the health insurance marketplace for Rhode Island businesses with 50 or fewer employees.  Although businesses with up to 50 employees are exempt from employer responsibility, federal tax incentives may be available to qualifying small businesses providing health insurance coverage. Combining the purchasing power of small businesses could help distribute the risk pool and administrative costs, making health plans more affordable for purchasers.  

As with the rest of the state’s health insurance exchange, careful consideration with regard to the design of SHOP, the affordability of plans, and SHOP access should be priorities to support effective implementation. The price structure and sustainability of SHOP is contingent on its population.  Active outreach to small employers, especially through existing broker networks, and a manageable process, are critical to the viability of SHOP.  However, current eligibility restrictions imposed by the state’s statutory definition of a small group (less than 50, compared to the national definition of up to 100 employees) may have negative consequences both for those businesses, which fall under the employer mandate, and with regard to the viability of SHOP.  Expansion up to 100 employees could give this population access to more affordable insurance options.