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Biz Health Exchange a Flop

Biz Health Exchange a Flop

According to the New Mexico Health Insurance Exchange, just 1,001 New Mexicans from 162 companies had health insurance policies through the SHOP as of October 1.


They were touted as online marketplaces that small businesses would flock to in order to buy health insurance for their employees. But in New Mexico and nationally, the small business, or SHOP, health insurances exchanges created by the Affordable Care Act have been a big flop.

Nationally, about 85,000 people from 11,000 small businesses have gotten insurance through the SHOP, or Small Business Health Options Program, according to an article Thursday by Kaiser Health News. That represents less than one percent of the 16.7 million people in the U.S. who have insurance through small group plans, the article said. That low usage and enrollment comes after states and the federal government spent millions of dollars developing and marketing their SHOP exchanges.

In New Mexico, the SHOP enrollment numbers are as dismal. According to the New Mexico Health Insurance Exchange, just 1,001 New Mexicans from 162 companies had health insurance policies through the SHOP as of October 1. That’s despite the fact that NMHIX spent more than $27 million in federal grant money establishing the SHOP in 2013 and 2014. The exchange’s average costs to enroll those people was $21,000 per person, according to the New Mexico Legislative Finance Committee.

During its first year in operation, the NMHIX’s board of directors decided to get the SHOP exchange operational instead of the exchange for individuals. The SHOP was working for the ACA’s first open enrollment period that began in October 2013, but the individual exchange wasn’t, and the NMHIX decided to use the federal exchange for individuals. That first year’s roll out of the federal exchange for individuals, healthcare.gov, was a disaster. The site crashed and didn’t work for long periods of time.

In 2014, New Mexico’s exchange, which has gotten more than $100 million in federal grants, decided to focus on building its own individual exchange. But that effort foundered when the feds changed their mind about the kind of exchange they wanted, and after the U.S. Centers for Medicare and Medicaid Services declined NMHIX’s request for a $97.9 million grant to continue building its individual exchange.

As a result, the NMHIX has decided to permanently use the federal individual exchange. In the meantime, its SHOP exchange, which is available to employers with less than 50 workers, has gone mostly unused. And the exchange itself, which has spent millions on marketing, educational and outreach programs to get people to buy insurance, has enrolled a little more than 52,000 people, —  far below what it wanted and originally estimated for enrollment.

And what of all that money spent on the SHOP and scuttled individual exchange?

According to the LFC, it wasn’t well spent. “NMHIX has spent $78 million with limited benefits to taxpayers,” the LFC said in its report. “Marketing was costly with low resulting enrollment, and the investments in IT did not result in a full implementation of the individual exchange.”

The report said that NMHIX’s enrollment rate was low compared to other states. In New Mexico, about 180,000 people are believed to be eligible to enroll through the exchange. But the enrollment rate points to a 28 percent penetration rate compared to the national average of 36 percent.

“NMHIX has spent $25 million on consumer assistance contractual service, with almost half spent on marketing, media and advertising with uncertain value,” the LFC’s report said. “Little evidence supports a continued reliance on this strategy to improve enrollment. At the height of a revised campaign designed for the first enrollment period, enrollment actually dropped. Furthermore, year-over-year new enrollment declined by 16 percent, although the federal projections indicated it should double.”

The Kaiser story said that insurance brokers, insurers and state officials cited numerous reasons for the failure of the SHOPs to attract more members. They included fewer and more expensive health plans on the SHOPs than are available outside the exchanges and a decision by the Obama administration to let small businesses keep their existing policies until 2017.

Dennis Domrzalski is an associate editor at ABQ Free Press. Reach him at dennis@freeabq.com

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.