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D.C. small businesses to buy insurance through gov’t. marketplace

The D.C. Health Benefit Exchange board voted Wednesday to force all companies with 50 or fewer people on their health plan to purchase insurance through the new government-run marketplace when it launches in 2014, a controversial proposal roundly criticized by a coalition of businesses.

However, the vote marked a significant concession from an earlier proposal to set the minimum for avoiding the exchange at 100 covered lives.

Board members, who voted unanimously, said the marketplace will need as many insured members as possible to guarantee a wide enough risk pool and generate sustainable funding. Businesses argue that they’ll lose the flexibility and freedom necessary to structure a health plan that fits their budgets and their workers’ unique situations.

“What they call simpler plans, we call fewer choices,” said Hannah Turner, a legislative expert at Bethesda-based Keller Benefits Services Inc., which led business opposition.

The debate over how exactly to structure the exchange now moves to the D.C. Council, which will have to enact legislation giving insurance Commissioner William White the authority to make the changes.

It’s not immediately clear exactly how many people would be affected by the mandatory exchange rule under the changes approved by the board.

According to a report from Mercer LLC, about 13 percent of the District’s 323,000 people with employer-sponsored health plans are in companies with fewer than 25 employees; another 13 percent are in a broader group between 25 and 99.

In explaining the board’s decision to lower the limit, board member and Georgetown professor Kevin Lucia said the larger group plans face different circumstances and weren’t absolutely necessary to guarantee sufficient volume. And the self-funding option — that is, choosing to fund the insurance risk internally — is becoming a more viable option for companies that size, which would exempt them from exchange rules altogether.

“It’s a distinct group, this 50 to 100,” Lucia said. “We need to learn a lot more about their behavior and reaction to be required to buy through the exchange, and with that, there is always this risk that they are susceptible to leave this market and go into the self-funded market.”

The reprieve may be short-lived. While the District joins Vermont as the only jurisdictions to consider making the new marketplace mandatory for small businesses, federal law will redefine small businesses up to the 100-person level in 2016.

“I think the concession is promising for some of our small employers,” Turner said. “It buys them two years, but it doesn’t solve the problem. They will still eventually be in the exchange.”

Turner said the business coalition will turn its efforts to lobbying the D.C. Council, but said council members have been “surprised” to hear the direction taken by the exchange board, comprised of seven voting members appointed by Mayor Vincent Gray.

During Wednesday’s meeting, board members said they remain eager to work with the business community and all other stakeholders as work continues.


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