in the state by the participating issuers of health coverage. Enrollment for the SB-SHOPs, as of June 1, 2014 for most states, has  been lower than expected, and CMS officials said they do not expect the  enrollment trends for the FF-SHOPs to be significantly different, although  they are still in the process of collecting enrollment data. Premiums varied across  states, though were generally comparable to premiums for small group  plans within the same state offered outside of the SHOPs. SHOPs Were Operational in All States, Although Many Expected Features Were Not Yet Available, Particularly for the Federally Facilitated SHOPs

All of the FF-SHOPs and most of the SB-SHOPs were operational as  required—that is, accepting enrollment applications—as of October 1,  2013. Websites where employers could review plan information, including  premiums and benefits, were available on October 1, 2013, for all FF- SHOPs and most SB-SHOPs. This information allows employers and  employees to make meaningful comparisons about available SHOP plans  in their state. CMS is currently preparing to implement  online enrollment for the FF-SHOPs for 2015, and expects to launch  online enrollment fully in all FF-SHOPs by November 15, 2014, when  SHOP enrollment begins for 2015. According to CMS, fifteen SB-SHOPs offered employee choice in 2014  through a variety of approaches, though employee choice was delayed  for the FF-SHOPs until 2015. State-Based SHOP Enrollment Was Significantly Lower than Anticipated, While Enrollment Data for Federally Facilitated SHOPs Were Not Yet Available

SB-SHOP plans had enrolled approximately 76,000 individuals—including  employees, spouses, and dependent children—into plans purchased  through 11,742 small employers, as of June 1, 2014 for most states, with  end dates ranging from May to September 2014. Based on official estimates and stakeholders’ expectations, SB-SHOP  enrollment—as of June 1, 2014 for most states, with end dates ranging  from May to September 2014—was significantly lower than anticipated  and, at its current pace, is unlikely to reach expectations by the end of  2014. that 2 million employees would enroll in coverage through the SB-SHOPs  and FF-SHOPs in 2014, with the number of enrollees rising to 3 million in  2015 and leveling off at 4 million enrollees by 2017. Enrollment data for the FF-SHOPs was not yet available, though CMS  officials reported that the agency was in the process of collecting the data  from issuers. However, CMS officials said they do not have reason to  expect major differences in enrollment trends for 2014 between the SB- SHOPs and the FF-SHOPs. Most SHOPs Have Multiple Plans Available in Each County, and Plan Premiums Varied Across States and Were Generally Comparable to Similar Plans Outside the SHOPs

In nearly all states, multiple issuers offered multiple plans in the SHOPs in  2014. Stakeholders Identified Several Factors That May Have Led to Current Low SHOP Enrollment and That May Affect Future Enrollment Growth

Stakeholders we interviewed reported that the primary incentive for  employers to use the SHOPs has been the small business tax credit. Stakeholders  also described factors that may help stimulate or detract from SHOP  enrollment in the future. However, several stakeholders noted that the tax credit is too small and  administratively complex to motivate many small employers to enroll. Stakeholders Identified Several Factors That May Have Hindered Current SHOP Enrollment

Although the small business tax credit may have led some employers to  enroll in the SHOPs, stakeholders identified several other factors that  may have hindered enrollment, thus leading to current low SHOP  enrollment. Delays in key SHOP features. Limited awareness of and misconceptions about SHOP  availability. Many stakeholders, including state exchange officials  and national- and state-level agent, broker, and employer  representatives, reported a lack of employer awareness of the ability  to enroll in SHOP plans beginning October 1, 2013, largely due to  misconceptions about whether the SHOPs were open for enrollment  and a lack of outreach by states and CMS. Renewal of existing, noncompliant plans. Stakeholders Identified Various Factors That Have the Potential to Contribute to or Detract from Future SHOP Enrollment Growth

Despite the various factors that may have restrained SHOP enrollment to  date, many stakeholders noted that certain other factors suggest that the  SHOPs have the potential to experience future enrollment growth. Improved coordination with agents and brokers. Increased marketing to employers. Concluding Observations

The SHOPs are an important element of PPACA, intended to provide a  new mechanism by which small employers can shop for and purchase  health insurance coverage for their employees and to offer features not  typically available to the employees of small employers, such as the  ability to choose among multiple health plans. They point to such factors as the phase- out of the noncompliant plans, the expected availability of online  enrollment and employee choice functions in many more SHOPs, and  intended CMS or state efforts to improve SHOP awareness and  coordination with agents and brokers. These collective factors will vary across  states and continue to evolve, suggesting that a determination of the  long-term impact of the SHOPs remains premature at this time. Agency Comments

We received comments from HHS on a draft of this report (see app.
Why GAO Did This Study

The Patient Protection and Affordable Care Act required SHOPs—exchanges, or marketplaces, where small employers can shop for health coverage for their employees—to be established in all states. States may elect to establish and operate SHOPs themselves or allow CMS to do so within the state. Enrollment in SHOPs was to begin in October 2013, with coverage effective as early as January 2014. GAO was asked to examine the early implementation experiences of the SHOPs.
In this report GAO describes (1) SHOP functionality, enrollment, plan availability, and premiums and (2) stakeholders' views on key factors that have affected current SHOP enrollment or may affect future enrollment growth. GAO reviewed relevant information from CMS and states, including data on employer and employee enrollment, plan availability, and premiums generally through June 1, 2014. GAO also interviewed representatives of key stakeholders that operate SHOPs (CMS and states), offer coverage in SHOPs (health insurance issuers), obtain coverage through SHOPs (small employers), or assist in obtaining coverage through SHOPs (agents and brokers) on a national basis and, for certain stakeholders, in five states—California, Illinois, Kentucky, Rhode Island, and Texas. The five states were selected based on factors including varied issuer participation levels and SHOP functionality. The experiences of these stakeholders cannot be generalized to other states or stakeholders.
GAO incorporated HHS comments on a draft of this report as appropriate.

What GAO Found

Though all of the Small Business Health Options Programs (SHOPs) required by the Patient Protection and Affordable Care Act were operational, many features were not yet available and enrollment was low as of June 2014. According to the Centers for Medicare & Medicaid Services (CMS), the agency that oversees the SHOPs, all 33 of the SHOPs run by CMS (federally facilitated, or FF-SHOPs) and 14 of the 18 SHOPs run by states (state-based, or SB-SHOPs) were accepting enrollment applications as of the October 1, 2013, deadline. The remaining 4 SB-SHOPs became operational by the following May. Websites where employers could review plan information such as premiums and benefits were available on October 1, 2013, for all FF-SHOPs and most SB-SHOPs. Other key SHOP features—online enrollment and employee choice, the ability for employees to choose among multiple plans—were delayed for all FF-SHOPs, but available for most of the SB-SHOPs. CMS is currently preparing to implement online enrollment for all FF-SHOPs and employee choice for many of the FF-SHOPs for 2015. Based on official estimates and stakeholders' expectations, enrollment for the SB-SHOPs has been significantly lower than expected. The 18 SB-SHOPs had enrolled about 76,000 individuals—including employees, their spouses, and dependent children—in plans purchased through nearly 12,000 small employers, as of June 1, 2014, for most states. Enrollment data for the FF-SHOPs was not yet available, although CMS was in the process of collecting the data from issuers and expected to have complete data by early 2015. However, CMS officials said they do not expect major differences in enrollment trends for 2014 between SB-SHOPs and FF-SHOPs. Finally, most SHOPs had multiple plans available in each county, although a small number of states had counties with no plans available. Premiums for SHOP plans varied across states and were generally comparable to premiums for other small group plans offered within a state but outside of the SHOP.
Stakeholders identified several factors that may have led to current low SHOP enrollment and that may affect future enrollment growth. Many stakeholders reported that the primary incentive for employers to use the SHOPs has been the small business tax credit available to eligible employers who offer coverage through a SHOP, although some noted that the credit may be too small and administratively complex to motivate many employers to enroll. Other factors identified that may have hindered current enrollment include the ability of employers to renew plans that existed before the SHOPs—which, depending on state requirements, is permitted until October 1, 2016—and employer misconceptions about SHOP availability. Stakeholders also described factors that may help stimulate or detract from future SHOP enrollment growth. For example, the phase-out of existing pre-SHOP plans, the implementation of employee choice by an increasing number of SHOPs, improved coordination with agents and brokers, and increased marketing to small employers may help stimulate enrollment growth. Conversely, other factors, such as the 2-year limit on the availability of the small business tax credit and the likelihood, according to stakeholders, that SHOP premiums will not be lower than non-SHOP premiums, may hinder future enrollment growth. The evolving and localized nature of these factors suggests that that a determination of the SHOPs' long-term impact remains premature at this time.