Many of us who are interested in the development of the Covered California SHOP, had thought the primary appeal of the SHOP would be its ability to offer a wide range of choices to the employees of California small businesses - both among carriers and benefit plans. Yet as discussions with stakeholders progressed, some experts presented opposing views.
Experts Presented Limited Choice Views
James Robinson, Ph.D. Director of the Center for Health Technology at UC Berkeley advised, “There is always this back-and-forth between choice and efficiency. You have to either rely on the individual to make choices among a broad menu of choices, or you have to use the leverage of enrollment and limit contracting to a small number of plans.”
Bill Wehrle is Vice President, Health Insurance Exchanges for Kaiser Permanente said, “Kaiser Permanente believes that offering a choice of carriers is crucial. However, introducing unfettered choice among benefits is expensive. We favor a system where the employer picks a benefit level (bronze for example) and the worker can buy up one level (silver) if he chooses. That offers some choice, but is not completely unfettered.”
The Pacific Community Ventures small businesses survey, “Understanding Health Care Decision Making in California” published the following: We asked small business owners if an employee choice option in the Exchange would make it more attractive, less attractive, or about the same - 54% said “about the same”, 29% more attractive, 13% less attractive.
Available Choices Considered
So it is not a foregone conclusion that the Exchange Board will opt for a wide selection of choices for employees in the SHOP exchange. At the Exchange Board Meeting on May 22nd, staff presented the options it has considered and its recommendations regarding the choice issues. The following options are available:
- Option 1. Employer chooses issuer (insurance company) and tier (bronze, silver, gold, etc.) employee selects the health plan and coverage level within the available SHOP options.
- Option 2. Employer chooses issuers, employee chooses tier: Employer chooses among available health plans and allows the employee to select the level of coverage among metal tiers.
- Option 3. Employer chooses tier, employee chooses issuer: Employer establishes the metal tier for all employees, and allows employee to select among available health plans.
- Option 4. Paired or defined choice: Employee chooses a specific combination of health plans for employees to select from. Further choice may or may not be available among coverage tiers.
- Option 5. Full employee choice: Employer determines the maximum contribution that will be made on behalf of employee, and allows employee to select health plan and coverage level.
Staff, advised by its Price Waterhouse consultants, made a preliminary recommendation to pursue option 5 - full choice of Qualified Health Plans (QHP) and coverage tiers for employees, with a defined contribution paid by the employer. “This option provides maximum choice for employees which may encourage long term participation of employers in Covered California, requires minimal decision-making by the employer, and enhances competition among health plans.”
We applaud the staff’s recommendations and agree wholeheartedly that employee choice with defined contributions by employers is the way to go, This decision empowers employees and frees employers from making benefit decisions based on the “greater good”.