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Health care law delays insurance marketplace for small businesses

November 27, 2013 at 12:00 AM EST
The government announced more delays for the HealthCare.gov implementation. Small businesses won't be able to enroll employees on federal insurance exchanges until next year. Judy Woodruff talks to Wall Street Journal's Louise Radnofsky about the implications, especially for people counting on tax credits to pay for insurance.
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JUDY WOODRUFF: Now: the White House announcement that another key element of President Obama’s health care law is not ready to go. Small businesses will not be able to enroll their employees on the federal website until November of next year. Coverage wouldn’t take effect until January of 2015. They can continue to go through insurance companies and brokers.

It is the latest in a series of setbacks that have plagued implementation of the president’s plan.

To fill us in on the details, we turn to Louise Radnofsky of The Wall Street Journal.

Louise, welcome back to program. Why did the administration do this?

LOUISE RADNOFSKY, The Wall Street Journal: Well, they did it because it wasn’t ready and because they said that they were focusing on other things, getting the website up and running for individuals. This was something they felt they could jettison, and they did.

JUDY WOODRUFF: So, tell us which small businesses are affected. I know not all of them have to pay attention to this regulation, those with employees under 50? Is that right?

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LOUISE RADNOFSKY: Yes.

And a number of small businesses do voluntarily provide coverage to their employees right now and want to continue doing so next year. There’s nothing in the law that requires them to do so, but the law includes tax credits towards the cost of the coverage in some cases.

So, for small businesses that were looking to buy through healthcare.gov, which would be in one of the 36 states where the exchange isn’t being run by the state itself, they’re not going to be able to use the website. They’re going to have to continue to go to an insurer or an agent or an broker, probably somebody they’re using already, and then they will have the opportunity to apply later in the year for tax credits, basically any time before they file their taxes.

JUDY WOODRUFF: Well, expand on that. Explain, what is the difference going to be then? If you’re — if you run a small business and you were counting on signing up through the exchange, and now you’re told you need to go through an insurance company or broker, what is the difference going to be for you?

LOUISE RADNOFSKY: Well, the difference is that it — and it’s really quite a big blow to the idea of the exchange, which was supposed to be an online marketplace where you could compare plans and then finalize the process. It was designed to increase more competition and more transparency into the insurance-obtaining process.

You can still go online starting Dec. 1 and actually browse through oppositions, but you can’t complete the sign-up. So, at that point, you go to the insurer or the agent or the broker. And that’s really the key difference here.

JUDY WOODRUFF: And do you then lose out because you’re not eligible for any sort of tax credit subsidy?

LOUISE RADNOFSKY: You’re still able to get the tax credit. The tax credit is supposed to be applied to any plan that the agent or broker or insurer is offering that would have been available on the exchange. In other words, it had been certified as being compliant with the new requirements in the law.

The requirements of the law for small group plans actually go a little further, too. They do affect the way small group insurance is priced for the first time, again, no preexisting conditions a lot of age-rating restrictions around that, and so small businesses across the board, however they get their coverage, will benefit from that.

But the exchange was such an important centerpiece of this.

JUDY WOODRUFF: So, Louise, how big a blow is this to the implementation of this new law?

LOUISE RADNOFSKY: Well, it only affects small businesses, and, clearly, for the most high-profile part of the law, attempting to extend coverage to individuals who don’t have it, it doesn’t affect it.

But if you think about it in terms of what it would have meant if it had been the individuals, you can understand quite how important it is to the small group. It’s the administration basically saying, we can’t get this particular part of the exchange up and running for another year, so we’re giving up. Just go back to your insurer and we will try and figure out that tax subsidy issue later.

JUDY WOODRUFF: Now, meanwhile, Louise, late this afternoon, the administration announced another change. They say they are replacing the Web hosting provider for the online exchange. Tell us about that.

LOUISE RADNOFSKY: Well, this is a decision that, apparently, was reached in the summer or earlier, but the Web — the Verizon provider of the data center that was supporting the site had had a number of outages that started to emerge after Oct. 1.

It’s been very embarrassing for everybody involved. They are making a switch. They’re planning to do that by around the end of March. What people need to know about that is that, first of all, the existing provider is going to be staying in place for the time being and that provider has had some problems. But, secondly, the transition itself, they have to get this into gear, could be bumpy, and it’s not as if the website doesn’t have enough problems already.

JUDY WOODRUFF: And so summing it all up for people who have been looking at the Nov. 30 deadline the administration set as the new deadline for people to be able to sign up, they said the website’s going to be faster starting this weekend. What should people expect?

LOUISE RADNOFSKY: Well, what we think we know is that the pages are loading faster. A lot of errors aren’t emerging. In other words, the site looks better at the front end.

The administration says it’s also been working on the back end, the really complicated issues that might not be immediately apparent to people, but could cause them to have difficulty signing up for coverage. The administration says that people will not only be able to navigate the site. They will be able to use the system as a whole, the vast majority of them, at any rate, to successfully enroll for coverage. So, we’re going to discover on Dec. 1 is if that is the case.

JUDY WOODRUFF: And we will find out. It’s just right around the corner.

Louise Radnofsky of The Wall Street Journal, thank you.