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STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

Committee on Small Business

"The Small Business Health Options Program: Is it Working for Small Businesses?"

December 11, 2013

Thank you, Mr. Chairman.   As just about every employer and employee knows, there are few issues of greater importance than access to healthcare.  Before the Affordable Care Act was enacted, the rising costs of health care were regularly cited by small firms as one of their biggest worries. Health reform addressed two of the chief problems small businesses faced in purchasing health coverage:  lack of choice and skyrocketing costs.  In fact, HHS recently reported that, in 11 states, premiums were an average of 18% lower than the amount small firms paid prior to the law’s enactment.

Much focus lately has revolved around the individual marketplace that can help uninsured individuals purchase qualified health plans.  Unfortunately less attention has been paid to the Small Business Health Options Program – commonly referred to as the SHOP exchange.  This marketplace was designed to provide an array of affordable, high-quality health insurance plans for small employers and their employees.

Business owners demanded more options in the health insurance marketplace and the SHOPs provide those options, while also driving competition.  It is essential that competition remains vibrant in the health insurance marketplace because when it declines, premium costs generally go up.  The SHOP marketplace addresses this issue by encouraging competition but also guaranteeing high quality health insurance.

This new exchange marketplace provides benefits to owners and employees alike. SHOPs make it possible for eligible small businesses to provide qualified health plans to their employees and even take advantage of tax credits. Employers have more control over the coverage they offer and how much they contribute to employee premiums.  Employees get the peace of mind knowing they receive the benefit of new market reforms like preventive care and not being excluded because of a pre-existing condition.

One study recently found that employers liked features of the SHOP exchanges, including getting one bill, writing one monthly insurance check, and easily comparing plans.  Still, the implementation of SHOPs has not been without its problems.

Several delays with employee choice and the website have led to some frustrations for all parties involved.  Although there have been bumps in the road, optimism remains high because of the long-term benefits the SHOPs will bring.  Today’s hearing will give us the chance to hear about how this marketplace is helping small firms and their continued implementation.

We’ve already seen per capita health care spending grow at its lowest rate on record for any three-year period -- and less than one-third the long-term historical average since 1965.  This finding demonstrates just how critical it is to keep an open dialogue to ensure the success of the SHOPs for the sake of small firms -- and the entire health care market.  

Our witness today will help us understand how SHOPs are working for small firms and how we can continue to move forward with meaningful solutions. I would like to welcome Director Cohen for taking time out of his busy schedule to join us.  I am sure he will provide the Committee with valuable insight.

Thank you and I yield back.

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