The health insurance exchanges are one of the most -- if not the most -- important components of health care reform for small businesses. A well-designed business exchange can lower small businesses' insurance costs, offer them and their employees more choices of plans and reduce the burden of administering those plans.
The Affordable Care Act gives states quite a bit of leeway in setting up their exchanges. For instance, states can have one exchange for everyone or split the exchange into two categories, one for individuals and one for small businesses. California is creating one specifically for small businesses -- the Small Business Health Options program, or SHOP. Fortunately for the state's small employers, the Golden State is far ahead of the curve. The more time a state takes to set up its exchange, the better suited for its customers it will be when it opens, and ultimately more successful in the long run.
That's why Small Business Majority has been involved in the creation of the state's SHOP exchange from the get-go. In fact, one of our small business Network Council members, a small business owner from San Francisco, sits on the SHOP advisory work group.
Various issues have been raised over the course of setting up the SHOP exchange, including whether stand-alone vision and dental plans should be included -- a debate currently dominating the individual exchange landscape.
We supported including vision and dental plans in the SHOP exchange because it's important the SHOP be a true, one-stop shop for small businesses. We know from looking at other successful small business exchanges that this "one-stop shop" model is the most effective. Take, for instance, the Connecticut Business and Industry Association exchange, which has 5,500 employer members, 80,000 covered lives and 16 years of experience.
The Connecticut business exchange offers a variety of necessary services for employers in a one-stop shop, uses brokers to distribute products, utilizes an employee choice model and has avoided adverse selection by continually improving plan designs and monitoring the outside market. They became one of the most successful small business exchanges in the country by learning and reacting to the needs of Connecticut's small business owners. So far, California's SHOP is on track to do the same.
From a small business perspective, the more comprehensive and robust an exchange can be, the more people will take advantage of its services. Employers would be less likely to use an exchange if they purchase one type of insurance through it but have to go elsewhere to purchase the rest. And the bottom line is, the more people using it, the more successful the exchange will be in lowering costs.