Small businesses give insurance exchanges mixed reviews

NEW YORK — More small businesses than expected are signing up for health insurance on state exchanges that opened this month.

The exchanges, which began operating Oct. 1 under the new health care law, are designed to offer low-cost insurance for individuals and small businesses. Many business owners have been pleasantly surprised by the rates and coverage, according to accounts from owners and exchange officials. But some owners are disappointed and plan to buy insurance privately.

A spot check of exchanges across the U.S. shows the number of companies that have opened accounts on any state exchange so far tends to be in the hundreds. Officials note it’s still early in the process given that policies sold on the exchanges won’t take effect until Jan. 1.

New York, Minnesota and Vermont officials say small business enrollments have surpassed expectations. But signup rates differ widely partly because of the way the exchanges and plans are set up. In Maryland, the small business exchange won’t open until Jan. 1. In Washington state, the small business exchange exists in only two of 39 counties. Insurers aren’t offering coverage elsewhere because most employers have private insurance plans or get their coverage through trade groups, says Michael Marchand, a spokesman for the exchange.

But even in states where small business exchanges aren’t open, there’s plenty of interest. Oregon’s exchange won’t open until early November, but more than 16,000 people have visited sections of the website that detail coverage for small companies.

In Minnesota, about 350 small businesses created accounts on the state’s exchange as of Tuesday morning.

“That’s more than we thought we would have,” says April Todd-Malmlov, executive director of the state’s exchange.

“I thought we’d just have a lot of lookers.”

Pleased with rates

Dominique Rodgers is pleased with the rates on Louisiana’s exchange.

“They looked comparable to what I’m paying now, a little more expensive,” says Rodgers, office manager at Reputation Capital Media Services, a marketing firm based in Baton Rouge, La.

She’s not ready to sign up for coverage. She’ll meet with her company’s outside human resources adviser and review the options before making a decision by early November.

Members of the Small Business Majority are generally pleased by what they’ve seen, says John Arensmeyer, CEO of the advocacy group.

“The rates are a little better than they expected,” Arensmeyer says. “They’re not seeing costs go through the roof.”

Christina Rae is shopping for insurance for the one employee of her public relations firm, and saw prices on the New York exchange that ranged from $334 a month for a bronze plan to $550 a month for platinum coverage. She thought the price on the platinum plan was too high, but she expects to buy on the exchange.

“It comes down to what’s going to be covered. It’s not going to be worth giving her bronze coverage if it doesn’t give her everything she needs,” says Rae, owner of Buzz Creators, based in Valhalla, N.Y. “I expect we’ll end up in the middle.”

The unhappy ones

In Vermont, while many owners like what they see on the exchange, others say the premiums are too high, says Robin Lunge, the state’s director of health care reform. She says the unhappy ones likely have had bare-bones insurance until now.

“They’ll now have better coverage but it will increase their monthly costs,” she says.

Dr. Leo Lombardo was surprised to learn from the California exchange that he’s unlikely to get a break on insurance for employees he’ll soon hire for his clinic. Under the new law, employers can get a tax credit if the average salary they pay is under $50,000. Lombardo, whose practice is in Ventura, expects to pay salaries of $80,000 and more to his staffers, including a nurse and physician’s assistant.

“Without the additional tax credit, there’s no advantage in going to the exchange compared to going to an insurance company and buying a small business policy,” he says.

And many owners won’t buy on exchanges because they’re satisfied with plans they already have, says Todd McCracken, president of advocacy group National Small Business Association.

“Their intention is to keep doing what they’ve been doing.”