Sam’s Club announced that it is opening a private health insurance exchange for its members. The press release from the retailer announced that Sam’s Club will be partnering with Aetna to open an exchange geared toward small business owners who are struggling to find affordable healthcare for their employees.
Background on Private Exchanges
A private health insurance exchange is a store or shop specializing in health insurance merchandise. More specifically, a health insurance exchange is a broker’s health insurance offering to individuals and/or employees. Private health insurance exchanges typically include the following components:
A choice of two or more health insurance options
Advice and recommendation on what health insurance options best fit your needs
Automated billing for the chosen health insurance plan premium(s)
On-going support for the chosen health insurance plan(s)
Sam’s Club Private Exchange
Sam’s Club is a division of Walmart Stores Inc. This announcement came just weeks after Walmart announced their parnership with DirectHealth.com and their entrance into world of individual health insurance.
According to the Sam’s Club press release, the “Aetna Marketplace for Sam’s Club is the first mass retail-supported private health care exchange designed to meet the needs of both the small business owner and their employees.” The exchange is geared toward Sam’s Club business members with two or more employees in 18 states.
Although the exchange only offers plans from one insurance provider, Sam’s Club is in hopes of offering a more popular alternative to the Small Business Health Options Program (SHOP Marketplace), who’s rollout flopped last year, and has failed to meet their enrollment goals in many states.
The SHOP Flop
The Affordable Care Act (ACA) designed the SHOP Marketplace to provide small employers with more choices for their healthcare plan. The rollout of the SHOP Marketplace has faced its share of obstacles, changes, and delays. The SHOP Marketplace still isn’t working for small businesses. There have been several delays in the implementation of SHOP Marketplace program and its features, including:
The “Employee Choice” feature that offers employees a menu of plans to choose from was delayed in the 33 states who used a federally-run SHOP Marketplace in 2014. Small businesses in these states were limited to offering a single plan through federally-run SHOP Marketplaces.
18 of the 32 states using a federally-run SHOP Marketplace opted out of the “Employees Choice” feature in 2015, limiting the healthcare plan choices for small businesses again in 2015.
During the first open enrollment period, online enrollment was delayed
Small businesses hoped the SHOP Marketplaces would help them offer affordable health benefits that employees value. But instead:
Competition is low in the SHOP exchanges (i.e. in most states there is still little choice for employees, and little competition to drive costs down).
Premiums cost more in the SHOP Marketplaces than on the individual health insurance market (i.e. the premiums are still cost prohibitive for most small businesses).
Premium tax credits are only available in the individual exchanges (i.e. providing further cost incentive to send employees to the individual market).
Because of the core issues with the SHOP Marketplace, and the new opportunities on the individual health insurance market, many small businesses are passing up the SHOP in favor of individual health insurance. Since employers with under 50 FTE employees are not subject to the employer mandate, most small employers are seeing the advantages of individual health insurance and allowing employees to select their own health plan from the Individual Health Insurance Marketplace.