SMALL BUSINESS 

HEALTH 

INSURANCE 

EXCHANGES

Low Initial Enrollment 

Likely due to Multiple, 

Evolving Factors

Report to the Chairman, Committee on 

Small Business, House of 

Representatives

November 2014

GAO-15-58

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-58, a report to the 

Chairman, Committee on Small Business, 

House of Representatives

November 2014

SMALL BUSINESS HEALTH INSURANCE 

EXCHANGES

Low Initial Enrollment Likely due to Multiple, Evolving 

Factors

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 FFSHOPs 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 FFSHOPs 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.

View GAO-15-58. For more information, 

contact John Dicken at (202) 512-7114 or 

dickenj@gao.gov.
Page i GAO-15-58 Small Business Health Insurance Exchanges

Letter 1 

Background 4

SHOPs Were Operational in All States, Although Many Expected 

Features Were Not Yet Available and Enrollment Was Low as 

of June 2014 9

Stakeholders Identified Several Factors That May Have Led to 

Current Low SHOP Enrollment and That May Affect Future 

Enrollment Growth 18

Concluding Observations 29

Agency Comments 29

Appendix I Small Business Health Options Program (SHOP) Features as of 

June 1, 2014 31

Appendix II State-Based Small Business Health Options Program (SB-SHOP) 

Enrollment Generally as of June 1, 2014 33

Appendix III Small Business Health Options Program (SHOP) 2014 Average 

Monthly Premiums for Silver-Tier Plans 34

Appendix IV Small Business Health Options Program (SHOP) Silver-Tier Plan 

Availability 36

Appendix V Comments from the Department of Health and Human Services 38

Appendix VI GAO Contact and Staff Acknowledgments 40

Figure

Figure 1: Total Enrollment in the State-Based Small Business 

Health Options Programs (SB-SHOPs) Generally As of 

June 1, 2014 13

Contents
Page ii GAO-15-58 Small Business Health Insurance Exchanges

Abbreviations

CBO Congressional Budget Office

CCIIO Center for Consumer Information and Insurance Oversight

CMS Centers for Medicare & Medicaid Services

FF-SHOP federally facilitated Small Business Health Options 

 Program

HHS Department of Health and Human Services

PPACA Patient Protection and Affordable Care Act

QHP qualified health plan

SB-SHOP state-based Small Business Health Options Program

SHOP Small Business Health Options Program

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-15-58 Small Business Health Insurance Exchanges

441 G St. N.W.

Washington, DC 20548

November 13, 2014

The Honorable Sam Graves

Chairman

Committee on Small Business

House of Representatives

Dear Mr. Chairman:

The Patient Protection and Affordable Care Act (PPACA) required the 

creation in all states of Small Business Health Options Programs 

(SHOPs)1

—exchanges, or marketplaces, where small employers can 

shop for and purchase health coverage for their employees.2 SHOPs 

were required to begin accepting enrollment applications for 2014 

coverage by October 1, 2013, with coverage starting as early as 

January 1, 2014.3 A state may elect to establish and operate a SHOP 

itself (through a state-based, or SB-SHOP) or allow the Department of 

Health and Human Services’ (HHS) Centers for Medicare & Medicaid 

Services (CMS) to establish and operate a federally facilitated SHOP 

(FF-SHOP) within that state.4

 

1

Pub. L. No. 111-148, §§ 1311(b), 1321(c),124 Stat. 119, 173, 186 (Mar. 23, 2010) 

(codified at 42 U.S.C. §§ 18031(b), 18041(c)) (hereafter, “PPACA”), as amended by the 

Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 

1029 (Mar. 30, 2010) (hereafter, “HCERA”). In this report, references to PPACA include 

any amendments made by HCERA.

In June 2013, we reported on the status of 

federal and state efforts to establish the SHOPs. At that time, we found 

that both CMS and states had made progress in establishing SHOPs, 

In this report, the term “state” includes the District of Columbia.

2

PPACA also required the establishment of individual exchanges in each state where 

eligible individuals can compare and select private insurance coverage from among 

participating health insurance plans. The SHOPs and individual exchanges are intended 

to provide single points of access to enroll employees of small businesses and individuals 

into private health plans. Individual exchanges are also the access point to determine 

eligibility for income-based premium subsidies and assess eligibility for other health 

coverage programs such as Medicaid.

3

PPACA, § 1311(b)(1), 124 Stat. at 173 (codified at 42 U.S.C. § 13031(b)(1)); 45 C.F.R. 

§ 155.410(b)-(c). 

4

CMS has invited states to assist with certain FF-SHOP operations. 
 

Page 2 GAO-15-58 Small Business Health Insurance Exchanges

although many activities remained to be completed and some were 

behind schedule.5

As the first year of SHOP operations nears its end, members of Congress 

have raised questions about the challenges that SHOPs may face in 

achieving long-term success. Such questions include whether SHOPs 

have been able to provide online enrollment tools and other expected 

functionalities, and in general whether SHOPs will offer sufficient value to 

small employers to motivate them to enroll. You asked that we examine 

the early implementation experiences of the SHOPs. In this report, we 

describe

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.

To describe early indicators of SHOP functionality, enrollment, plan 

availability, and premiums, we requested information from CMS and 

states and interviewed relevant officials. Specifically, to describe SHOP 

functionality, including when SHOPs became operational, whether 

SHOPs had a website that allowed employers to browse plan options and 

enroll online, and whether SHOPs offered employers the ability to offer 

their employees a choice among multiple plans, we requested information 

from CMS and interviewed CMS officials. We analyzed CMS and SBSHOP data on plan availability and premiums in 2014, and we analyzed 

SB-SHOP data on employer and employee enrollment for timeframes 

ending between May and September 2014, with most ending on June 1, 

2014. To assess the reliability of the data we received from CMS and 

states, we performed manual and electronic tests of the data to identify 

any outliers or anomalies and followed up with officials as necessary and 

incorporated the corrections we received. We determined that the data 

were sufficiently reliable for the purposes of our analysis. We also 

reviewed other information sources, including published literature and 

state SHOP websites, and identified federal requirements related to the 

SHOPs by interviewing CMS officials and reviewing relevant laws and

regulations.

 

5

GAO, Patient Protection and Affordable Care Act: Status of Federal and State Efforts to 

Establish Health Insurance Exchanges for Small Businesses, GAO-13-614 (Washington, 

D.C.: June 19, 2013).
 

Page 3 GAO-15-58 Small Business Health Insurance Exchanges

To describe stakeholders’ views on key factors that have affected current 

SHOP enrollment or may affect future enrollment growth, we interviewed 

national-level representatives of key stakeholders that operate, offer 

coverage in, obtain coverage through, or assist in obtaining coverage 

through SHOPs. Specifically, we interviewed officials from CMS’s Center 

for Consumer Information and Insurance Oversight (CCIIO) who oversee 

the operation of SHOPs, as well as national organizations representing 

issuers of health coverage, insurance commissioners, small employers, 

and health insurance agents and brokers.6 In addition, we selected five 

states in which to interview state-level representatives of the SHOPs, 

small employers, and agents and brokers.7

 To ensure that we captured a 

range of SHOP-related experiences and perspectives, we selected states 

that varied in terms of state population, geographic location, SHOP type 

(FF-SHOP or SB-SHOP), SHOP website functionality, including the 

availability of employee choice, and issuer participation in the SHOP. We 

selected Kentucky, Rhode Island, California, Illinois, and Texas for our 

study.8 For the SB-SHOP states—Kentucky, Rhode Island, and 

California—we interviewed state exchange officials. For the FF-SHOP 

states—Texas and Illinois—we interviewed CMS officials involved with 

the establishment and operation of the FF-SHOPs.9

 

6

We interviewed representatives from the following national organizations: the Blue Cross 

and Blue Shield Association, America’s Health Insurance Plans, the National Association 

of Insurance Commissioners, the National Federation of Independent Business, and the 

National Association of Health Underwriters.

Our work was limited 

to reviewing illustrative examples of stakeholders’ experiences with and 

perspectives on the SHOPs. The findings from our interviews therefore 

cannot be generalized to the perspectives and experiences of all issuers, 

insurance commissioners, employers, agents and brokers, or state 

exchange officials.

7

The employer and agent and broker organizations for which we interviewed state-level 

representatives were, respectively, the National Federation of Independent Business and 

the National Association of Health Underwriters. We refer to state-level officials who have 

participated in the establishment and operation of SHOPs as state exchange officials.

8

We interviewed agent and broker representatives in Kentucky, California, Illinois, and 

Texas, and employer representatives in California, Rhode Island, and Illinois. The agent 

and broker representative we contacted in Rhode Island and the employer representatives 

we contacted in Kentucky and Texas elected not to participate in an interview.

9

We also interviewed state exchange officials in Illinois, who are assisting CMS in 

operating the FF-SHOP in that state.
 

Page 4 GAO-15-58 Small Business Health Insurance Exchanges

We conducted this performance audit from February 2014 to November 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

PPACA included a number of provisions that changed requirements for 

small group health plans.10 For example, PPACA required that, beginning 

January 1, 2014, plans offer a set of minimum essential health benefits. 

PPACA also set standards for the percentage of total average costs that 

plans must cover for such benefits. The average costs covered by each 

plan are reflected in different plan levels, or tiers, and each tier is 

designated as bronze, silver, gold, or platinum.11 In addition, beginning on 

January 1, 2014, issuers are no longer able to consider the average 

health status of a particular group when setting premium rates and can 

only adjust premiums based on enrollment type (individual or family 

enrollment), geographic area, age, and tobacco use.12

PPACA required all small group health plans to comply with these 

requirements as of January 1, 2014.

Plans meeting 

these and other federal requirements, as well as other standards set by 

states, may be certified to be offered in an exchange; these plans are 

referred to as qualified health plans (QHPs).

13

 

10These requirements apply to small group health plans whether they are sold inside or 

outside of the SHOPs.

However, in response to concerns 

regarding some issuers terminating plans that did not comply with PPACA 

11For a bronze-tier plan, on average, an employee would be responsible for 40 percent of 

the costs of all covered benefits; for a silver-tier plan, on average, an employee would be 

responsible for 30 percent; for a gold-tier plan, on average, an employee would be 

responsible for 20 percent; and for a platinum-tier plan, on average, an employee would 

be responsible for 10 percent of the costs of all covered benefits. PPACA requires that 

issuers participating in an exchange offer, at a minimum, plans at both the silver and gold 

levels of coverage.

12There are further restrictions in the amount issuers can vary premiums based on the 

ages and tobacco use of employees within a small group.

13PPACA provided a narrow exception from these requirements for “grandfathered 

plans”—health plans in which an individual was enrolled on March 23, 2010.

Background
 

Page 5 GAO-15-58 Small Business Health Insurance Exchanges

requirements, CMS announced in November 2013 that it would provide 

transitional relief under which states could elect to permit issuers in their 

states to offer renewals of their noncompliant plans for a plan year 

beginning between January 1, 2014, and October 1, 2014, provided the 

plans met certain conditions.14 In March 2014, CMS extended this 

transitional policy through October 1, 2016, and noted that the agency 

may grant an additional 1 year extension, if necessary.15

PPACA also mandated the establishment of SHOPs in each state to allow 

small employers to compare available health insurance options in their 

states and facilitate the enrollment of their employees in coverage. Until 

2016, states have the option to define small employers either as 

employers with 100 or fewer employees or employers with 50 or fewer 

employees.16

The SHOPs are required to have certain functionalities to facilitate the 

health plan comparison and enrollment process. For example, each 

SHOP must provide access to the SHOP to employers and employees 

through a website, toll-free call centers, and in person. Each SHOP must 

present the QHPs approved by the SHOP for the small-employer market 

To be eligible for SHOP coverage, a small employer must 

offer coverage to all full-time employees in a QHP through a SHOP. To 

be eligible to enroll in a QHP through a SHOP, an individual must have 

been offered health insurance coverage by a qualified employer through a 

SHOP.

 

14Conditions included that the coverage was in effect on October 1, 2013 and that 

appropriate notices were provided to individuals and small employers. See Department of 

Health and Human Services, Centers for Medicare & Medicaid Services, Centers for 

Consumer Information & Insurance Oversight, Letter to Insurance Commissioners on 

Market Transitional Policy, November 14, 2013, accessed September 8, 2014, 

http://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-

2013.PDF. According to CMS, 39 states adopted the transitional policy for 2014, while 

12 states did not.

15See Department of Health and Human Services, Centers for Medicare & Medicaid 

Services, Extension of Transitional Policy through October 1, 2016, (Washington, D.C.: 

Mar. 5, 2014). Under this policy, depending on state requirements, some small employers 

may choose to remain enrolled in noncompliant plans through the end of plan years 

beginning on or before October 1, 2016.

16Under PPACA, beginning in 2016, small employers will be defined in all states as those 

with 100 or fewer full-time equivalent employees. Beginning in 2017, states may allow 

issuers of health insurance coverage in the large group market—issuers offering coverage 

to groups of 101 or more full-time equivalent employees—to offer QHPs through the 

SHOP and, in turn, will allow large employers to obtain coverage through the SHOP.
 

Page 6 GAO-15-58 Small Business Health Insurance Exchanges

in the state by the participating issuers of health coverage.17 In addition, 

the benefits, cost-sharing features, and premiums of each QHP must be 

presented in a manner that facilitates comparison shopping of plans by 

small employers and their employees. Each SHOP must accept employer 

and employee applications through the SHOP website and may also 

accept applications over the phone, in person, or by mail. This application 

should collect the information necessary to screen an employer’s 

eligibility for SHOP participation and identify employees eligible to enroll 

in a QHP. Employers and employees may receive assistance to compare 

coverage options and complete applications through a qualified insurance 

agent or broker.18

In addition, SHOPs will implement requirements related to employee 

choice—that is, the ability of employees to choose a plan among multiple 

plans offered to them by their employer.19

 

17All issuers or members of the same issuer group with a market share of greater than 

20 percent in the state’s small group health insurance market must participate in a state’s 

FF-SHOP if they wish to participate in its federally facilitated individual exchange. For 

other issuers, participation is generally voluntary. States with SB-SHOPs may also impose 

requirements related to issuer participation—for example, Maryland required issuers to 

participate in its SB-SHOP if the issuers’ reported total annual earned premiums were 

$20 million or more in the small group market outside the exchange.

Employee choice may be 

offered in different ways. In general, a SHOP must allow a qualified 

employer to offer its employees a choice among all QHPs available within 

a specific metal tier of coverage, but may allow an employer to offer 

18Small employers and employees may also receive assistance from Navigators, who are 

individuals and entities, such as community and consumer-focused nonprofit groups, 

which receive grants from exchanges and provide information and services in a fair and 

impartial manner to enrollees or potential enrollees. However, CMS has noted that 

Navigators have focused largely on the individual exchanges, and that brokers have 

played a much more central role in the SHOPs—as they have traditionally done in the 

small-group health coverage market—providing service at the time of plan selection and 

enrollment and customer service throughout the plan year.

19In general, when offering coverage though a SHOP, employers select a plan, which 

becomes the employer's reference plan. Employers also decide the percentage they will 

contribute to the premiums for employees who select that plan, referred to as a defined 

contribution. Employees who have been offered a choice of plans are typically able to use 

the amount of the defined contribution for the reference plan when paying their premiums 

for a different SHOP plan.
 

Page 7 GAO-15-58 Small Business Health Insurance Exchanges

broader employee choices among multiple plans across different tiers.20

According to CMS, employee choice is intended to be a fundamental new 

benefit of SHOPs, in that small employers would be able to offer multiple 

plans from more than one issuer of health coverage, whereas traditionally 

most small employers have offered only one or a few plans from a single 

issuer. SHOPs were initially required to have the capacity to allow 

employers to provide employee choice beginning in 2014. However, 

under a final rule issued in June 2013, the requirement that SHOPs offer 

employee choice was first postponed to 2015, although SB-SHOPs 

retained the option of providing employee choice in 2014. The 

requirement was further postponed under a May 2014 final rule to 2016 in 

states that could demonstrate that postponing employee choice would be 

in the best interest of small employers and their employees and 

dependents, given the likelihood that implementing employee choice 

could cause issuers to price their products and plans higher than they 

would otherwise due to issuers’ beliefs about adverse selection.

21

To provide an incentive for small employers to provide health insurance, 

and to make insurance more affordable, PPACA established a small 

business tax credit for certain eligible small employers offering coverage 

to their employees.22

 

20To make it more administratively efficient for employers to provide their employees a 

choice of QHP, CMS also required SHOPs to perform premium aggregation—that is, to 

aggregate the QHP premiums for multiple employees enrolling in SHOP coverage, 

provide the relevant employer with a single bill identifying the total amount that is due to 

the one or more QHPs in which the employer’s employees are enrolled, collect the 

appropriate amount from each employer, and pay the issuers of the QHPs directly.

The tax credit was available beginning in 2010, prior 

to the establishment of SHOPs. However, beginning in 2014, employers 

must offer coverage to their employees through the SHOP to be eligible 

21See 79 Fed. Reg. 30240, 30349-50 (May 27, 2014) (to be codified at 45 C.F.R. 

§ 155.705(b)(2)-(3)). Adverse selection refers to the potential for consumers with fewer 

health concerns to select certain plans—particularly those with lower premiums—and for 

consumers with greater health concerns to select other, more comprehensive plans. 

Applications for consideration of delaying employee choice until 2016 were due to CMS by 

June 2, 2014 for FF-SHOPs. According to CMS, the agency remains committed to 

implementing employee choice in all SHOPs by 2016.

22PPACA, §§ 1421, 10105(e), 124 Stat. at 237, 906 (codified at 26 U.S.C. § 45R).

To be eligible, an employer must: (1) have fewer than the equivalent of 25 full-time 

employees, (2) have an average annual employee wage below $50,000, and (3) cover at 

least 50 percent of the cost of health insurance coverage for employees.
 

Page 8 GAO-15-58 Small Business Health Insurance Exchanges

for the credit.23 Beginning in 2014, employers are eligible for the credit for 

a maximum of 2 years.24

PPACA directed states to establish SHOPs by January 1, 2014.25 In 

states electing not to establish and operate an SB-SHOP, PPACA 

required the federal government to establish and operate an FF-SHOP in 

the state.26 For 2014, 18 states chose to operate SB-SHOPs while 33 

states opted for an FF-SHOP.27

 

23The Internal Revenue Service has stated that in 2014, small employers in certain 

counties in Wisconsin and Washington where SHOP plans are not offered may be eligible 

for the tax credit if they offer coverage that would have qualified for the credit prior to 

January 1, 2014. See Internal Revenue Service, Section 45R – Transition Relief with 

Respect to the Tax Credit for Employee Health Insurance Expenses of Certain Small 

Employers, Internal Revenue Bulletin: 2014-2 (Washington, D.C.: January 6, 2014).

CMS’s and states’ roles in operating 

24The tax credit offered to eligible small employers from 2010 through 2013 was smaller 

than the credit offered beginning in 2014, but had no restrictions on the number of years 

employers could receive the credit. From 2010 through 2013, for-profit employers were 

eligible for a credit of up to 35 percent of the employers’ share of the employees’ 

premiums, and nonprofit employers were eligible for a credit of up to 25 percent. 

Beginning in 2014, eligible for-profit employers may receive a credit of up to 50 percent of 

the employers’ share of the employees’ premiums, and nonprofit employers meeting the 

eligibility criteria may receive a credit of up to 35 percent. The maximum credit is available 

to employers with 10 or fewer employees and with an average annual employee wage of 

$25,000 or less, and the size of the credit employers are eligible for decreases as 

employer size and average employee wage increase.

25PPACA, § 1311(b)(1), 124 Stat. at 173 (codified at 42 U.S.C. § 18031(b)(1)). 

26PPACA, § 1321(c), 124 Stat. at 186 (codified at 42 U.S.C. § 18041(c)).

27The 18 states that had SB-SHOPs in 2014 were California, Colorado, Connecticut, 

Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Nevada, New 

Mexico, New York, Oregon, Rhode Island, Utah, Vermont, Washington, and the District of 

Columbia.

CMS officials noted that Idaho, although initially approved as an SB-SHOP state, used the 

FF-SHOP platform in 2014. We therefore refer to Idaho as having an FF-SHOP in 2014 

for the purposes of our report. Including Idaho, the 33 states that had FF-SHOPs in 2014 

were Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Idaho, Illinois, 

Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Missouri, Montana, Nebraska, New 

Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, 

South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia, Wisconsin, and 

Wyoming. Some states were approved by CMS to assist with certain FF-SHOP functions 

associated with consumer assistance and plan management. 

These states differ from the SB-SHOP and FF-SHOP states presented in our June 2013 

report (GAO-13-614) because Idaho had an FF-SHOP according to our definition, while 

Mississippi operated an SB-SHOP, in 2014.
 

Page 9 GAO-15-58 Small Business Health Insurance Exchanges

SHOPs and individual exchanges may change in future years. CMS 

officials stated that as of September 2014, Nevada was planning to begin 

using the FF-SHOP platform, while Idaho was planning to begin using its 

own state-based platform, in 2015.

Though SHOPs were operational in all states as of June 1, 2014, many 

expected features were not yet available for a number of SHOPs. 

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. Most SHOPs 

had multiple plans available in each county, though in some states there 

were a few counties with no plans available. Premiums varied across 

states, though were generally comparable to premiums for small group 

plans within the same state offered outside of the 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. According to CMS, four of the SB-SHOPs—Hawaii, Maryland, 

Mississippi, and Oregon—were not operational as of the October 1, 2013, 

deadline, although all have since become operational. Hawaii became 

operational on October 15, 2013, Maryland became operational on 

April 1, 2014, and Oregon and Mississippi became operational on 

May 1, 2014.

Websites where employers could review plan information, including 

premiums and benefits, were available on October 1, 2013, for all FFSHOPs and most SB-SHOPs. This information allows employers and 

employees to make meaningful comparisons about available SHOP plans 

in their state. Plan information for the FF-SHOPs was provided by CMS 

through its website. According to CMS, on October 1, 2013, the SBSHOPs in Maryland, Oregon, and Mississippi lacked websites where 

employers could review plan and premium information. Mississippi has 

since added plan and premium information to its websites. Oregon and 

Maryland have directed employers to contact agents and brokers or 

issuers to review plan options.

SHOPs Were 

Operational in All 

States, Although 

Many Expected 

Features Were Not 

Yet Available and 

Enrollment Was Low 

as of June 2014

SHOPs Were Operational 

in All States, Although 

Many Expected Features 

Were Not Yet Available, 

Particularly for the 

Federally Facilitated 

SHOPs
 

Page 10 GAO-15-58 Small Business Health Insurance Exchanges

According to CMS, most SB-SHOPs created online enrollment portals by 

October 1, 2013, though a handful of states—Maryland, Oregon, 

California, and Mississippi—did not have online enrollment portals 

available or had to take them offline, requiring employers to enroll directly 

through issuers. For example, the California SHOP initially offered online 

enrollment but took its enrollment portal down in February 2014 due to 

technical challenges, leaving small businesses in California able to enroll 

in SHOP plans only through direct enrollment. Online enrollment for the 

Mississippi SHOP began when it became operational in May 2014, while 

Maryland and Oregon have yet to implement online enrollment for their 

SHOPs.

CMS did not implement online enrollment in the FF-SHOPs in 2014. As a 

result, employers enrolling in any of the FF-SHOPs, starting in October 

2013, had to enroll in SHOP coverage either through agents and brokers 

or directly through issuers.28 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 2015.29 The online enrollment system will 

allow, among other functions, enhanced features for agents and brokers, 

notification to employees of their employers’ annual open enrollment 

period, online employer payments, transmitting of enrollment and 

payment transactions to issuers, and the processing of coverage 

changes.30

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. These approaches included enabling 

 

28CMS and other stakeholders we interviewed noted that small employers have 

traditionally used direct enrollment methods, such as working with agents and brokers, to 

apply for small group coverage.

29In preparation for launching online enrollment, CMS planned to partially launch online 

enrollment early in five FF-SHOP states (Delaware, Illinois, Missouri, New Jersey, and 

Ohio) in October 2014. Employers were to be able to log in, create an account, and 

complete the eligibility application, or authorize an agent or broker to assist with signing up 

for SHOP coverage.

30CMS plans to add functionality to support its online system in early 2015, including 

enhanced call center access to assist employers, employees, and agent and brokers; 

integration with the other exchange systems to facilitate IRS reporting and data analytics; 

and the handling of coverage terminations and delinquent payments.
 

Page 11 GAO-15-58 Small Business Health Insurance Exchanges

employers to offer a choice of plans across all metal tiers and all issuers; 

a choice of plans across one metal tier but for multiple issuers; or a 

choice of plans from one issuer but across multiple metal tiers. Some 

states allowed the employer to choose which employee choice model to 

use, while other states only offered one approach. Four states, including 

California, required that employers offer their employees a choice of 

plans, while others, including Rhode Island and Kentucky, gave 

employers the option of choosing one plan or offering wider plan choice to 

their employees.

The majority of enrolled employers in SB-SHOP states where data was 

available took advantage of the employee choice feature. For example, 

exchange officials in Kentucky and Rhode Island said that approximately 

65 and 61 percent of enrolled employers, respectively, decided to offer 

their employees a choice of plans.31

CMS did not offer employee choice in the FF-SHOPs in 2014 but plans to 

do so for many FF-SHOPs for 2015. However, CMS offered state 

insurance commissioners the chance to recommend whether or not 

employee choice should be implemented in their state for 2015 or 

delayed until 2016, if the commissioners could adequately explain that 

this would be in the best interest of small employers and their employees 

In Rhode Island, in cases where 

employers offered the choice of any plans through the SHOP, just over 

50 percent of their employees chose the reference plan the employer had 

selected, 14 percent selected a different plan within the same tier, 

13 percent purchased a lower metal tier—or less expensive—plan than 

the reference plan, and 21 percent purchased a higher metal tier—or 

more expensive—plan than the reference plan. CMS officials said that 

two additional SB-SHOPs, Colorado and New York, reported that a 

majority of employers decided to offer their employees a choice of plans. 

However, three SB-SHOPs did not offer employee choice in 2014: 

Maryland, Massachusetts, and Oregon. Massachusetts was unable to 

offer employee choice because its online system for employee choice is 

still in development, according to CMS officials. Maryland and Oregon 

were unable to offer employee choice because SHOP enrollment was 

only available through direct enrollment, according to CMS and state 

officials, respectively.

 

31The remaining employers offered their employees one SHOP plan. All employers 

offering coverage through California’s SHOP offered employee choice, as this was a 

requirement for participating in the state’s SHOP.
 

Page 12 GAO-15-58 Small Business Health Insurance Exchanges

and dependents.

32 Fourteen FF-SHOP states chose to allow CMS to 

implement employee choice for 2015 while 18 FF-SHOP states chose to 

delay employee choice until 2016.33 (See app. I for additional details on 

SHOP functionality as of June 1, 2014.)

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. Enrollment varied widely 

among the 18 states with SB-SHOPS, from 33,696 individuals (purchased 

through 3,580 small employers) in Vermont,34 to 1 individual (purchased 

through 1 small employer) in Mississippi.35 (See fig. 1.)

 

3279 Fed. Reg. 30240, 30349-50 (May 27, 2014) (to be codified at 45 C.F.R. 

§ 155.705(b)(2)-(3)). 

33CMS required that FF-SHOP states notify the agency of their preference and justification 

for delaying employee choice until 2016. CMS approved the delay of employee choice 

until 2016 for 18 FF-SHOPs: Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, 

Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, 

Oklahoma, Pennsylvania, South Carolina, South Dakota, and West Virginia. In addition, 

Nevada, an SB-SHOP in 2014, will use the FF-SHOP platform in 2015 and will not offer 

employee choice. The 14 FF-SHOP states that chose to allow CMS to implement 

employee choice for 2015 were Arkansas, Florida, Georgia, Indiana, Iowa, Missouri, 

Nebraska, North Dakota, Ohio, Tennessee, Texas, Virginia, Wisconsin, and Wyoming.

34Vermont required that all small group plans in the state be offered only through the 

SHOP. 

35Mississippi provided enrollment information as of July 1, 2014. Mississippi’s SHOP did 

not come online until May, which limited the time that small employers have had to enroll.

State-Based SHOP 

Enrollment Was 

Significantly Lower than 

Anticipated, While 

Enrollment Data for 

Federally Facilitated 

SHOPs Were Not Yet 

Available
 

Page 13 GAO-15-58 Small Business Health Insurance Exchanges

Figure 1: Total Enrollment in the State-Based Small Business Health Options Programs (SB-SHOPs) Generally As of June 1, 

2014

Notes: Figure indicates the total number of individuals (including the employees, spouses, and any 

dependent children) covered by SB-SHOP plans.

a

Vermont required that all small group plans in the state be offered only through the SHOP. Vermont 

provided data as of June 13, 2014.

b

Utah had an operational exchange for small employers prior to the enactment of the Patient 

Protection and Affordable Care Act.

c

California provided data as of May 22, 2014.

d

The number for Hawaii only reflects the number of employees covered, as total enrollment was not 

available. 

e

The number for the District of Columbia does not include Congressional employees who are required 

to obtain coverage through the District of Columbia’s SB-SHOP in order to receive a government 

contribution toward their health insurance premiums under the Federal Employees Health Benefits 

Program.

f

The number for Oregon only reflects the number of employees covered, as total enrollment was not 

available.

g

Maryland provided data as of September 15, 2014.

h

Mississippi provided data as of July 1, 2014.
 

Page 14 GAO-15-58 Small Business Health Insurance Exchanges

Based on the average number of employees who enrolled in each state 

per small employer, it appears that the employer groups that enrolled in 

the SHOPs generally had few employees, particularly given that states 

allowed employers with as many as 50 employees to enroll in the SHOPs 

in 2014. Overall, the average number of employees per employer was 

3.7, although the average number of employees enrolled per employer in 

each state varied. Employers that enrolled in Utah had the largest 

average number of employees enrolled per employer, 8.3, while New 

York had the smallest average number of employees enrolled per 

employer, 1.6.36

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.

(See app. II for additional details on SB-SHOP 

enrollment.) 

37 In April 2014, the Congressional Budget Office (CBO) estimated 

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 2017.38

 

36Mississippi is a unique situation in that only one employer enrolled and so was not 

included in this calculation.

In general, 

stakeholders we spoke with said that SHOP enrollment has been low, 

often lower than anticipated. For example, officials from the three SBSHOPs we spoke to all said that enrollment has been low, with officials 

from two of the states indicating enrollment was lower than expected. 

Officials from the third state said challenges related to implementation 

and the lack of resources for marketing the SHOP had already lowered 

their expectations for enrollment, though they acknowledged that 

enrollment was generally low. Further, other stakeholders, including 

issuer, employer, and agent and broker representatives, also said that 

enrollment to date has been lower than anticipated.

37CMS officials cautioned against inferring future enrollment trends from the partial-year 

enrollment data for 2014. Officials said that employers may enroll in the SHOPs at any 

point in the year, unlike individuals pursuing coverage in the individual exchanges, which 

have limited open enrollment periods. According to the officials, more employers will likely 

become eligible for SHOP coverage in later months, when their existing non-SHOP plans 

end.

38See Congressional Budget Office, Updated Estimates of the Effects of the Insurance 

Coverage Provisions of the Affordable Care Act (Washington, D.C.: April 2014).
 

Page 15 GAO-15-58 Small Business Health Insurance Exchanges

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. According to officials, because CMS was not ultimately 

prepared to implement online enrollment it has had to require each issuer 

involved in an FF-SHOP to manually report enrollment data. This data 

reporting role for issuers had not originally been anticipated, and so CMS 

has had to work with issuers to develop protocols to submit the data. 

CMS officials said that they are working on a system through which 

issuers can report their 2014 SHOP enrollment data, and that they expect 

to have initial data by fall of 2014 but will not have complete data for 2014 

until early 2015.39 However, CMS officials said they do not have reason to 

expect major differences in enrollment trends for 2014 between the SBSHOPs and the FF-SHOPs. Beginning in 2015, CMS officials said they 

plan to have online enrollment that will likely facilitate the more timely and 

accurate collection of enrollment data.40

 

39CMS officials noted that some issuers have reported to CMS that they are unable to 

accurately report complete enrollment data for 2014, which could underestimate actual 

enrollment numbers ultimately reported to CMS later in 2014.

40While enrollment data is not available for FF-SHOPs, employers that are interested in 

applying for the small business tax credit in 2014 must submit paper applications to CMS 

to obtain an official SHOP eligibility determination. CMS reported that it had received 

12,376 paper applications from employers for FF-SHOPs as of September 8, 2014. 

According to CMS officials, employers that are interested in the tax credit have up to one 

year after enrolling in the SHOP to submit their paperwork to CMS. As a result, the 

number of paper applications for the SHOP tax credit as of September 8, 2014 likely 

differs from the actual number of employers that plan to apply for the tax credit in 2014. In 

addition, as some enrollees in the SHOP may not be eligible for or interested in applying 

for the tax credit, the number of paper applications likely differs from actual employer 

enrollment in the FF-SHOPs. 
 

Page 16 GAO-15-58 Small Business Health Insurance Exchanges

In nearly all states, multiple issuers offered multiple plans in the SHOPs in 

2014. The total number of participating issuers and plans in each state 

varied widely from 1 to 13 issuers and 3 to 320 plans.41 Forty-five states 

had more than one issuer participating in their SHOP and 31 states had 3 

or more participating issuers and each issuer offered, on average, 12 

plans in each rating area.42

In looking at silver-tier plans specifically, we found that most states had at 

least one silver-tier plan available in each county, though New York, 

Washington, and Wisconsin had counties where no silver-tier plans were 

available.43

The type of plan with the highest enrollment also varied across SB-SHOP 

states, as did the proportion of employees enrolling in these plans.

Further, most states had at least two silver-tier plans available 

in each county. When looking at the total number of silver-tier plans, 

Washington, D.C., offered the most, with 89, while Arkansas, New 

Hampshire, and West Virginia each only had one silver-tier plan available. 

Regarding issuer participation in the SHOPs, we found that just over half 

of states offered silver-tier plans from two or more issuers in each county. 

Maryland had the most issuers offering silver-tier plans in its SHOP, with 

13, though six states—Arkansas, Mississippi, New Hampshire, North 

Carolina, Washington, and West Virginia—had only one issuer offering 

silver-tier plans.

44

 

41For additional details on issuer participation in both the individual and small business 

exchanges beginning in 2014, as well as how this compares with issuer participation in the 

individual and small group markets prior to the exchanges, see GAO, Patient Protection 

and Affordable Care Act: Largest Issuers of Health Coverage Participated in Most 

Exchanges, and Number of Plans Available Varied, 

The 

highest enrollment plans in each state were most often gold-tier. The plan 

with the highest enrollment was a gold-tier plan in seven states, a silverGAO-14-657 (Washington D.C.: 

August 29, 2014)

42PPACA required each state to establish geographical rating areas that all issuers in the 

state must use as part of their rate setting. In some states these rating areas are based on 

counties, while in others they are based on Metropolitan Statistical Areas.

43As noted previously, PPACA requires that issuers participating in the SHOP offer, at a 

minimum, plans at both the silver and gold levels of coverage.CMS officials said that they 

expect SHOP plans to be offered in these counties in plan year 2015.

44Enrollment 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.

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
 

Page 17 GAO-15-58 Small Business Health Insurance Exchanges

tier plan in five states, and a platinum-tier plan in five states.45 The 

proportion of individuals enrolled in the highest enrollment plan ranged 

from approximately one-fourth of enrollees in California, Connecticut, 

Kentucky, and Vermont to less than 10 percent in Minnesota, New 

Mexico, New York, and Utah.46

Premiums for silver-tier plans varied within and across states,

(See app. II for additional details on the 

highest enrollment SB-SHOP plans.)

47 though no 

clear patterns emerged. Monthly silver-tier plan premiums for enrollees 

aged 21 ranged widely from $138 for the least expensive Hawaii plan to 

$523 for the most expensive Alaska plan, with the median plan costing 

$262.48 For enrollees aged 40, the monthly premiums varied from $176 

for the least expensive Hawaii plan to $669 for the most expensive Alaska 

plan, with the median plan costing $335. Finally, for enrollees aged 60, 

the monthly premiums varied from $375 for the least expensive Hawaii 

plan to $1421 for the most expensive Alaska plan, with the median plan 

costing $711. The differences between the premiums of the most 

expensive and least expensive silver-tier plans within a given state also 

varied widely. Arizona had the largest difference, with the most expensive 

plan costing almost three times as much as the lowest-cost plan.49 North 

Carolina had the least disparate silver-tier plan premiums, with the most 

expensive plan costing only approximately five percent more than the 

least expensive plan.50

 

45Mississippi was excluded from this summary because it only had one enrollee as of 

July 1, 2014.

(See app. III for additional details about SHOP 

premium variation across states.)

46Mississippi was excluded from this analysis because it only had one enrollee as of 

July 1, 2014. Hawaii and Oregon were excluded because they were unable to provide 

total enrollment, and Washington was excluded because it was unable to provide total 

enrollment for the highest enrollment plan.

47We focused our analysis of plan premiums on silver-tier plans.

48Vermont does not allow variation in plan premiums based on age and so was not 

included in these comparisons.

49As would be expected, this difference was consistent across Arizona plans for all three 

age groups that we reviewed.

50Similar to Arizona, this difference was consistent across North Carolina plans for all 

three age groups that we reviewed.
 

Page 18 GAO-15-58 Small Business Health Insurance Exchanges

In the three states where we compared SHOP premiums to non-SHOP 

small group market premiums in the state, we found that premiums for 

silver-tier plans were generally comparable.51 PPACA requires that prices 

for identical plans within a given state be the same, regardless of whether 

plans are offered on or off the SHOP.52 Many stakeholders we spoke to 

said that SHOP premiums were generally comparable to premiums for 

plans outside of the SHOPs. As previously noted, PPACA requires that 

small group plans meet a number of requirements. These requirements 

limit the overall variability between PPACA-compliant plans offered within 

or outside of the SHOPs, including variation in premiums.

Stakeholders we interviewed reported that the primary incentive for 

employers to use the SHOPs has been the small business tax credit. 

However, stakeholders identified several factors that may have hindered 

enrollment, thus leading to current low SHOP enrollment. Stakeholders 

also described factors that may help stimulate or detract from SHOP 

enrollment in the future.

 

51For California, the prices for non-SHOP plans were somewhat higher than the prices for 

SHOP plans, with the lowest priced, the median priced, and the highest priced plan in the 

non-SHOP market being somewhat higher than the lowest priced, the median priced, and 

the highest priced plan in the California SHOP. For Illinois, the highest priced plan in the 

non-SHOP market was somewhat more expensive than the highest priced plan in the 

Illinois SHOP.

We requested data from the five states that we selected to interview state-level 

stakeholders, California, Illinois, Kentucky, Rhode Island, and Texas. The necessary data 

were not available within our timeframes from Kentucky and Texas.

52PPACA, § 1301(a)(1)(C)(iii) (codified at 42 U.S.C. 18021(a)(1)(C)(iii)).

Stakeholders 

Identified Several 

Factors That May 

Have Led to Current 

Low SHOP 

Enrollment and That 

May Affect Future 

Enrollment Growth
 

Page 19 GAO-15-58 Small Business Health Insurance Exchanges

Many stakeholders, including issuer, employer, and agent and broker 

representatives we interviewed, reported that the primary incentive for 

employers to use SHOPs has been the small business tax credit.53

Employers must generally purchase coverage through a SHOP and meet 

certain other criteria, including having fewer than 25 employees, to be 

eligible for the credit, which they may receive for a maximum of two years 

beginning in 2014. Most employer group representatives reported that 

those small employers that were interested in and taking steps to enroll in 

the SHOPs were largely doing so in order to be eligible for the tax credit. 

Exchange officials in Kentucky also reported that the tax credit has likely 

been an important incentive for small employers enrolling in the state’s 

SHOP, and that most employers that had enrolled as of April 2014 had 

less than 25 employees, indicating that they may have been pursuing the 

credit.54 Similarly, as discussed previously, we found that the average 

number of enrolled employees in SB-SHOPs ranged from 1.6 to 8.3 

employees,55

However, several stakeholders noted that the tax credit is too small and 

administratively complex to motivate many small employers to enroll. 

CMS officials and one employer group representative noted that the 

temporary nature of the tax credit—that is, the fact that employers may 

receive the credit for only 2 years beginning in 2014—may deter some 

employers from offering coverage for the first time through the SHOP to 

obtain the credit. This is consistent with our prior work, which revealed 

low use of the credit even prior to the establishment of the SHOPs. In 

2012, we reported that the take-up of the small business tax credit in tax 

year 2010, the first year the credit was offered, was much lower than the 

estimated number of eligible employers. According to tax preparers and 

other stakeholders we interviewed for that work, small employers likely 

did not view the credit as a sufficient incentive to begin offering health 

suggesting that many enrolled employers may have been 

eligible for the credit.

 

53The Internal Revenue Service has stated that in 2014, small employers in certain 

counties in Wisconsin and Washington where SHOP plans are not offered may be eligible 

for the tax credit if they offer coverage that would have qualified for the credit prior to 

January 1, 2014.

54Kentucky exchange officials noted that they cannot determine how many employers 

have applied for or received the tax credit because the federal government, rather than 

the state, handles tax credit applications.

55Mississippi is a unique situation in that only one employer enrolled and so was not 

included in this calculation.

Stakeholders Reported 

that the Small Business 

Tax Credit Has Been the 

Primary Motivator for 

Employers to Enroll in 

SHOPs
 

Page 20 GAO-15-58 Small Business Health Insurance Exchanges

insurance, particularly given the complexity of, and time required to claim, 

the credit.56

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. Stakeholders, including 

representatives of national employer, agent and broker, and insurance 

commissioner groups, said that the delays in implementation of online 

enrollment and employee choice in the FF-SHOPs may have hindered 

SHOP enrollment. These key features, which have also been delayed 

in certain SB-SHOPs, are not typically available to small employers 

purchasing coverage through other means. According to 

stakeholders, until these key features are implemented, employers 

may not have as much incentive to enroll in coverage through the 

SHOP.

• 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. Stakeholders said that 

media reports announcing delays in certain SHOP features—in 

particular, the delays in FF-SHOP online enrollment and employee 

choice—led many employers to assume that the overall 

implementation of SHOPs was delayed and that enrolling in plans was 

not yet possible. In addition, stakeholders said that low awareness 

stemmed from a federal and state emphasis on highlighting the 

availability of the individual exchanges. For example, exchange 

officials from one SB-SHOP state noted that employer awareness of 

 

56See GAO, Small Employer Health Tax Credit: Factors Contributing to Low Use and 

Complexity, GAO-12-549 (Washington, D.C.: May 14, 2012). CMS officials noted that the 

agency launched a SHOP Small Business Health Care Tax Credit Estimator, available at 

the federal exchange website, in early 2014 to ease administrative burden and help 

employers better understand the tax credit. According to the officials, this tool is intended 

to make it easier for employers to determine if they qualify for the tax credit as well as the 

size of the credit they might receive.

Stakeholders Identified 

Several Factors That May 

Have Hindered Current 

SHOP Enrollment
 

Page 21 GAO-15-58 Small Business Health Insurance Exchanges

the SHOP remained low in part because the state initially focused 

outreach and marketing efforts on the individual exchange. However, 

exchange officials from this and another SB-SHOP state reported that 

with the end of their individual exchanges’ open enrollment periods, 

the states are now focusing outreach and marketing efforts on their 

SHOPs, which must provide for rolling enrollment.57

• Renewal of existing, noncompliant plans. The majority of 

stakeholders—including national-level groups as well as stakeholders 

representing four of the five states included in our study—said that the 

ability for employers to renew their existing, non-PPACA compliant 

plans may have limited SHOP enrollment.58 National-level employer 

and agent and broker groups we interviewed said that most small 

employers chose to renew their existing plans in states where this 

was permitted, in part due to a general preference for the status quo, 

as well as other factors, such as concerns about potential premium 

increases associated with new plans.59

• Technical challenges and administrative burden. Some 

stakeholders said that the ongoing technical challenges and 

administrative burden associated with many of the SHOPs have 

served as a barrier to entry for employers, in part by discouraging 

some agents and brokers from recommending the SHOP to 

employers. National- and state-level employer group representatives 

reported hearing from small employers that they have avoided SHOPs 

due to technical challenges with SHOP websites, as well as 

administrative burdens, such as difficulty reaching customer service 

and, in some cases, the need to send application paperwork by mail.

State exchange officials reported that they worked closely with agents 

Kentucky, California, and 

Illinois exchange officials, as well as CMS officials who participated in

the implementation of the SHOP in Illinois and Texas, said that the 

renewal of these plans may have limited SHOP enrollment in these 

states.

 

57The open enrollment period refers to the limited time frame when individuals are eligible 

to enroll in QHPs through an individual exchange. Individuals may be eligible to enroll in 

QHPs outside of the open enrollment period if they experience certain qualifying life 

events.

58Rhode Island exchange officials indicated that this factor was not applicable in Rhode 

Island as it did not permit the renewal of non-PPACA-compliant plans in 2014.

59In addition, press reports have suggested that some issuers may have encouraged their 

customers to renew their noncompliant plans early, before SHOP enrollment and pricing 

became available.
 

Page 22 GAO-15-58 Small Business Health Insurance Exchanges

and brokers to establish their SB-SHOPs, particularly given that most 

small employers have traditionally relied on agents and brokers when 

purchasing coverage for their employees. However, state exchange 

officials and other stakeholders, including CMS officials, noted that 

agents and brokers still faced challenges associated with using 

SHOPs. These challenges included, in some cases, poor or 

inaccessible customer service for brokers; poor training for brokers on 

SHOP requirements; the extra time required to explain SHOP 

requirements to clients; challenges receiving compensation; and the 

lack of a dedicated broker “portal” on some SHOP websites that 

would allow brokers to set up and help manage accounts for their 

clients.60 Agent and broker representatives from one state noted that 

challenges such as these have led some agents and brokers to avoid 

recommending that their small employer clients use the SHOP.

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. 

According to some stakeholders, central to enrollment growth will be the 

phasing out of noncompliant plans, the resolution of the technical 

challenges and reduction of the administrative burden cited as hampering 

current enrollment, and the demonstration of a “value proposition” that 

gives employers a reason for preferring SHOP-based coverage to 

coverage available outside the SHOP. Stakeholders suggested several 

additional factors that could help stimulate future SHOP enrollment 

growth.

• Improved coordination with agents and brokers. Stakeholders, 

including CMS officials, state exchange officials, and issuer, 

employer, and agent and broker representatives, emphasized the 

importance of coordinating with and providing improved web- or 

phone-based tools to agents and brokers in order to facilitate SHOP 

enrollment. States and CMS reported taking steps to resolve certain 

challenges faced by agents and brokers when using the SHOP. For 

example, Kentucky exchange officials said that they are working to 

develop a tool that will allow agents and brokers to easily provide 

 

60The FF-SHOPs offered customer service phone lines, but not broker portals; however, 

CMS officials indicated that FF-SHOPs will offer broker portals when online enrollment 

begins in November 2014.

Stakeholders Identified 

Various Factors That Have 

the Potential to Contribute 

to or Detract from Future 

SHOP Enrollment Growth
 

Page 23 GAO-15-58 Small Business Health Insurance Exchanges

price quotes across multiple SHOP plans to their clients, and are 

considering allowing SHOP-certified agents and brokers to initiate 

applications on behalf of employers. Illinois exchange officials 

reported developing a dedicated section for agents and brokers on the 

state’s SHOP website through which agents and brokers can obtain 

updated information on the SHOP, in response to feedback from 

agent and broker community leaders. CMS officials said that 

establishing a broker portal for the FF-SHOPs is a key agency priority, 

and that the agency plans to have a broker portal in place when FFSHOP online enrollment becomes available in fall 2014. According to 

CMS officials, the portal will, among other functions, allow agents and 

brokers to search for and communicate with employer clients; monitor 

employees’ enrollment progress; make changes to employee rosters; 

and receive messages regarding employers’ monthly invoices, 

including any late payment warnings.61

• Availability of employee choice. Some stakeholders stated that the 

employee choice feature, when fully implemented in all states, will be 

a key value proposition for the SHOPs. For instance, CMS officials 

said that employers will likely value being able to offer employees a 

choice from among multiple plan and issuer options—an ability that 

small employers typically have not been able to offer. Employer group 

representatives reported that their members consider employee 

choice to be an important benefit of the SHOPs, as employees will be 

able to decide on their own the coverage that best suits their needs 

and, if necessary, will have the option to spend more to purchase 

more comprehensive plans. Evidence from Kentucky and Rhode 

Island, whose SHOPs offer, but do not require, the use of employee 

choice, further suggests that employers may value this feature. As 

discussed previously, according to state exchange officials, the 

majority of employers in Kentucky and Rhode Island that enrolled in 

the SHOPs chose to offer their employees the choice of multiple 

plans.62

However, some issuer representatives and other stakeholders were 

uncertain about the value of employee choice, noting that it is 

 

61Employee rosters contain information, such as names and dates of birth, for each 

employee to whom SHOP coverage is offered.

62According to CMS officials, data reported to CMS by two additional SB-SHOP states—

Colorado and New York—indicate that the majority of employers using the SHOP in those 

states have chosen to offer employee choice.
 

Page 24 GAO-15-58 Small Business Health Insurance Exchanges

challenging for issuers to implement and that too many choices may 

be overwhelming for employers and employees. Representatives from 

national issuer and insurance commissioner groups reported that it is 

time consuming and expensive for issuers to build the information 

technology systems required for premium aggregation and other 

issuer-specific functions necessary for employee choice. In addition, 

issuers and other stakeholders have reported concerns regarding 

whether employee choice would lead to adverse selection among 

plans in the SHOP—a concern that has, in part, led some states to 

delay their implementation of employee choice until 2016.

• Increased marketing to employers. Some stakeholders said that 

states need to better market the SHOP to small employers to increase 

SHOP awareness. Some employer group representatives said states 

need to improve outreach by more aggressively targeting small 

employers and highlighting the value of the SHOPs in their marketing. 

Exchange officials in one state emphasized the importance of 

marketing the SHOPs to small employers as a product that offers 

value, rather than performing traditional outreach, which is more 

characteristic of public programs. The officials also noted that 

marketing must be conducted continuously throughout the year, given 

that employers renew their coverage at different points in the year.

• Robust issuer participation. Although stakeholders representing 

four of the five states included in our study reported that issuer 

participation has not been a challenge, CMS officials said that robust 

issuer participation will be important in ensuring the SHOPs’ long-term 

viability. Issuer representatives noted that, due to the requirement that 

certain issuers must participate in a state’s FF-SHOP if they wish to 

participate in its federally facilitated individual exchange, some issuers 

will be required to participate in the SHOPs.63

 

6378 Fed. Reg. 15410, 15535 (Mar. 11, 2013) (to be codified at 45 C.F.R. § 156.200(g)). 

In addition, some SB-SHOPs require that issuers meeting certain requirements participate 

in the state’s SHOP. 

However, according to 

the representatives, other issuers may be hesitant to participate given 

factors such as uncertainties regarding delays in SHOP functionality 

and technical readiness; potential new requirements, such as those 

related to the adequacy of provider networks; the expense and 

complexity of implementing employee choice and other SHOP 

features; and the ability for employers to renew noncompliant plans. 

CMS officials said that although some issuers may be reluctant to 
 

Page 25 GAO-15-58 Small Business Health Insurance Exchanges

participate in the FF-SHOPs in the early years of implementation, 

once information technology systems have been fully developed and 

refined, issuers may be more eager to participate.

• Expansion of the SHOPs to larger employers. Exchange officials in 

one state noted that as eligibility for SHOP enrollment expands to 

employers with up to 100 employees—which must occur no later than 

January 1, 2016—and, eventually, to larger employers in some states, 

additional employers may consider the SHOP as an option for 

purchasing coverage.64

• Financial sustainability of the SHOPs. Exchange officials in one 

state noted that an essential element of SHOP viability will be 

ensuring the SHOPs are financially sustainable.

However, based on the small average number 

of employees per employer enrolled in SB-SHOPs, it remains to be 

seen whether larger employers will enroll when given the opportunity.

65

 

64CMS officials said that as of September 2014 they were not aware of any states that 

were planning to expand the SHOP to employers with 51 to100 employees in 2015.

They and other SBSHOP exchange officials we interviewed said that their states have 

proposed or finalized funding mechanisms in place. In two of the 

states, these funding mechanisms will draw from either all exchange 

plans—both individual and SHOP—or all health plans in the state; 

therefore, low initial SHOP enrollment is not likely to significantly 

Beginning in 2015, employers with 100 or more employees that do not offer affordable 

health coverage to 70 percent or more of their employees may be subject to a penalty if at 

least one employee receives subsidized coverage through an exchange. Beginning in 

2016, employers with 50 or more employees that do not offer affordable health coverage 

to their full-time employees may be subject to this penalty if at least one employee 

receives subsidized coverage through an exchange. PPACA, § 1513(a). 124 Stat. at 253 

(codified at 26 U.S.C. § 4980H); 79 Fed. Reg. 8544, 8575, 8597-8601 (Feb. 12, 2014) (to 

be codified at 26 C.F.R. §§ 54.4980H-4, 54.4980H-5). Therefore, as SHOP eligibility 

expands to larger employers and these penalties take effect, more employers may be 

likely to participate in the SHOP.

65States operating SB-SHOPs are required to ensure that the SHOPs are self-sustaining 

by January 1, 2015, meaning that states must ensure their SHOPs have sufficient funding 

to support ongoing operations, as federal grants awarded to establish exchanges will no 

longer be available. SHOPs may generate funding for SHOP operations in certain ways, 

including requiring issuers to pay user fees, or a percentage of premiums charged by the 

issuer. HHS requires that issuers participating in the FF-SHOPs pay a monthly user fee to 

fund FF-SHOP operations; in 2014, this fee is equal to 3.5 percent of the monthly 

premium charged by the issuer. HHS requires that this user fee be spread across all of an 

issuer’s small group plans, regardless of whether the plans are offered in a SHOP.
 

Page 26 GAO-15-58 Small Business Health Insurance Exchanges

affect SHOP operating revenues in those states.66

Stakeholders also described factors whose future effects on SHOP 

enrollment are more uncertain or have the potential to detract from SHOP 

enrollment growth in the long term.

 However, one 

stakeholder expressed concern regarding whether SHOPs will be 

sustainable in the long run if enrollment remains low, particularly given 

the expense required to maintain the SHOPs’ information technology 

systems. 

• Loss of the tax credit. As noted previously, stakeholders and our 

analysis of SB-SHOP enrollment data suggested that many 

employers currently enrolling in the SHOP may be eligible for the tax 

credit. However, employers may only receive the tax credit for a 

maximum of 2 years. It therefore remains to be seen whether 

employers will continue to purchase coverage through the SHOP 

once they have exhausted their ability to receive the tax credit, and 

how this will affect overall SHOP enrollment. One employer 

representative suggested that an extension of the credit, or a redesign of the credit such that larger businesses are eligible, will help 

ensure SHOP enrollment growth moving forward.

• Comparability of prices on and off the SHOP. Issuer 

representatives and other stakeholders noted that prices for SHOP 

plans are likely to remain similar to prices for non-SHOP small group 

plans, which may limit the incentive for small employers to enroll in 

coverage through the SHOP. According to stakeholders, small 

employers’ coverage decisions are largely driven by price. However, 

as we noted previously, premiums are currently similar for plans 

offered on and off the SHOP in part due to the requirement that prices 

for identical plans in a given state be the same, regardless of whether 

they are offered on or off the SHOP. In order for issuers to offer more 

competitive prices through the SHOPs, they must offer unique, 

SHOP-only plans that are lower in price when compared to nonSHOP options. However, according to issuer representatives, there 

are limited mechanisms by which issuers could do so. As PPACA 

requires that all plans offer a set of minimum essential health benefits, 

issuers are limited in the extent to which they can lower prices by 

 

66Exchange officials in the remaining SB-SHOP state noted that they have proposed 

various options for SHOP funding, but that they expect that operating revenues and 

expenditures for the state’s individual exchange and SHOP will be combined.
 

Page 27 GAO-15-58 Small Business Health Insurance Exchanges

restricting the benefits they offer in SHOP plans. In addition, though 

issuers could lower prices for SHOP plans by offering narrower 

provider networks, issuer representatives cite the high administrative 

costs of creating and maintaining new networks as a deterrent.

• Competition with private exchanges. Some stakeholders, including 

issuer, agent, and broker representatives, as well as exchange 

officials from one state, reported that private exchanges for small 

group coverage—or online health coverage marketplaces managed 

by private companies, such as issuers or benefits consulting firms—

are becoming more prevalent and may compete with SHOPs for 

employer enrollment. According to some agent and broker 

representatives, private exchanges may appeal to employers 

because, in some cases, they offer employee choice—a key value 

proposition of the SHOP that has not yet been implemented in all 

states—without many of the requirements associated with the SHOP. 

Exchange officials from one state said that recently created private 

exchanges in that state have been able to spend more on advertising, 

which has made it difficult for the SHOP to compete. However, the 

officials noted that the SHOPs provide increased value in that they 

offer full transparency and choice of SHOP plans—whereas some 

private exchanges, despite claiming to offer full choice of plans, 

simply offer plans from the carrier operating the exchange.

• Possibility of sending employees to the individual exchanges. 

Exchange officials from two states and some agent and broker 

representatives reported that some small employers have chosen, or 

may choose in upcoming years, to drop coverage for their employees 

altogether, particularly in light of the availability of premium and costsharing assistance for eligible low- and moderate-income individuals 

obtaining coverage through an individual exchange. CMS officials said 

they have heard anecdotal information that this may be occurring, but 

have no data. Several recent employer surveys have found that, while 

the majority of surveyed small employers were not considering 

dropping coverage for their employees, a minority were intending to or 
 

Page 28 GAO-15-58 Small Business Health Insurance Exchanges

considering whether to drop coverage and, in some cases, direct their 

employees to the individual exchanges in 2014 or 2015.67

• Potential for adverse selection. If it were to occur, adverse selection 

between SHOP and non-SHOP plans could lead to increased SHOP 

premiums and thus inhibit SHOP enrollment in the long term. 

However, issuer representatives said that the similarity in premiums 

seen thus far has diminished concerns about such adverse selection. 

The issuer representatives said a greater concern is the risk for 

adverse selection between PPACA-compliant plans—that is, both the 

SHOP and non-SHOP plans that comply with PPACA’s insurance 

reforms—and the existing, noncompliant plans that have been 

renewed. This risk may be temporary, as CMS’s current transitional 

relief policy, under which noncompliant plans may continue to be 

offered, permits issuers of such plans to offer renewals of these plans 

only for plan years beginning on or before October 1, 2016.68

 

67For example, one survey found that 67 percent of respondents said they would continue 

to offer health coverage in 2014, while 6 percent said they would definitely stop offering 

coverage and 27 percent said they would consider discontinuing coverage under certain 

circumstances. See eHealth ®, Small Employer Health Insurance Survey: March 2013,

accessed August 21, 2014, 

In 

addition, PPACA established mechanisms to mitigate adverse 

selection if it does occur among PPACA-compliant plans, and 

stakeholders said it will be at least 1 year, if not several years, before 

http://news.ehealthinsurance.com/_gallery/get_file/?file_id=514a002dfc96aa2799001afe&f

ile_ext=.pdf. Another survey found that 23 percent of respondents were considering 

dropping coverage and giving money directly to employees to purchase coverage through 

the individual exchange in late 2013 or 2014. See National Small Business Association, 

2014 Small Business Health Care Survey, accessed August 21, 2014, 

http://www.nsba.biz/wp-content/uploads/2014/02/Health-Care-Survey-2014.pdf. An 

additional survey found that the majority, or approximately 85 percent, of small employer 

respondents were very or definitely likely to continue coverage for their full-time 

employees in 2015, and another approximately 9 percent said that they were somewhat 

likely to continue coverage. The remaining 7 percent said they were more likely to direct 

employees to the individual exchanges in 2015. See International Foundation of Employee 

Benefit Plans, 2014 Employer-Sponsored Health Care: ACA’s Impact (Brookfield, Wis.: 

2014).

68CMS has noted, however, that it may consider extending this transitional policy for an 

additional year. See Department of Health and Human Services, Centers for Medicare & 

Medicaid Services, Extension of Transitional Policy through October 1, 2016, 

(Washington, D.C.: Mar. 15, 2014).
 

Page 29 GAO-15-58 Small Business Health Insurance Exchanges

it becomes clear if adverse selection is occurring in the SHOPs, as 

well as how well these mechanisms will mitigate its effect.69

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. While much progress has 

been made by CMS and states to ensure all SHOPs are now operational, 

early evidence suggests enrollment is significantly lower than anticipated 

amid the delayed availability of key functions among many SHOPs and 

misconceptions by employers about the availability of SHOPs. CMS 

officials and other stakeholders point to structural factors to help explain 

the current low enrollment—such as the temporary ability for employers in 

many states to renew their existing plans even if they do not comply with 

PPACA insurance reforms—and suggest reasons for optimism about 

future SHOP enrollment trends. They point to such factors as the phaseout 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. Nevertheless, other factors may 

temper such optimism, such as the loss of the small business tax credit 

for some employers, the potential for adverse selection, and the 

challenge SHOPs may face in competing with plans offered to small 

employers outside of the SHOPs. 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.

We received comments from HHS on a draft of this report (see app. V). 

HHS described steps it is taking to improve the SHOP program based on 

lessons learned from the first year of operation and emphasized the 

 

69These provisions, or risk mitigation mechanisms, are designed to mitigate the potential 

effects of adverse selection and provide stability for health insurance issuers in the 

individual and small group markets. All issuers in the small group market are eligible to 

participate in the risk adjustment programs. Issuers of small group plans offered through a 

SHOP are also eligible to participate in the temporary risk corridors program in effect in 

2014, 2015, and 2016. According to issuer representatives, of these two mechanisms, risk 

adjustment likely has the more significant ability to help stabilize SHOP premiums. GAO is 

separately examining early experiences with these risk mitigation programs.

Concluding 

Observations

Agency Comments
 

Page 30 GAO-15-58 Small Business Health Insurance Exchanges

future role SHOPs could play to produce more competition in the small 

group health insurance markets as the SHOPs improve and mature. HHS 

also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the Secretary of Health and 

Human Services and other interested parties. In addition, the report is 

available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

John E. Dicken at (202) 512-7114 or dickenj@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix VI. 

Sincerely yours,

John E. Dicken

Director, Health Care
Appendix I: Small Business Health Options 

Program (SHOP) Features as of June 1, 2014

Page 31 GAO-15-58 Small Business Health Insurance Exchanges

SHOP

Date SHOP 

enrollment 

began

SHOP website 

allows 

browsing for 

plans and 

premiums 

SHOP allows 

employers to 

enroll online

SHOP offers 

employee 

choice

State-based SHOPS

California 10/1/2013 ● ○a ●

Colorado 10/1/2013 ● ● ●

Connecticut 10/1/2013 ● ● ●

District of Columbia 10/1/2013 ● ● ●

Hawaii 10/15/2013 ● ● ●

Kentucky 10/1/2013 ● ● ●

Maryland 4/1/2014 ○ ○ ○

Massachusetts 10/1/2013 ● ● ○

Minnesota 10/1/2013 ● ● ●

Mississippi 5/1/2014 ● ● ●

Nevada 10/1/2013 ● ● ●

New Mexico 10/1/2013 ● ● ●

New York 10/1/2013 ● ● ●

Oregon 5/1/2014 ○ ○ ○

Rhode Island 10/1/2013 ● ● ●

Utah 10/1/2013b ● ● ●

Vermont 10/1/2013 ● ● ●

Washington 10/1/2013 ● ● ●

Federally facilitated SHOPs

Alabama 10/1/2013 ● ○ ○

Alaska 10/1/2013 ● ○ ○

Arizona 10/1/2013 ● ○ ○

Arkansas 10/1/2013 ● ○ ○

Delaware 10/1/2013 ● ○ ○

Florida 10/1/2013 ● ○ ○

Georgia 10/1/2013 ● ○ ○

Idahoc 10/1/2013 ● ○ ○

Illinois 10/1/2013 ● ○ ○

Indiana 10/1/2013 ● ○ ○

Iowa 10/1/2013 ● ○ ○

Kansas 10/1/2013 ● ○ ○

Appendix I: Small Business Health Options 

Program (SHOP) Features as of June 1, 

2014
Appendix I: Small Business Health Options 

Program (SHOP) Features as of June 1, 2014

Page 32 GAO-15-58 Small Business Health Insurance Exchanges

SHOP

Date SHOP 

enrollment 

began

SHOP website 

allows 

browsing for 

plans and 

premiums 

SHOP allows 

employers to 

enroll online

SHOP offers 

employee 

choice

Louisiana 10/1/2013 ● ○ ○

Maine 10/1/2013 ● ○ ○

Michigan 10/1/2013 ● ○ ○

Missouri 10/1/2013 ● ○ ○

Montana 10/1/2013 ● ○ ○

Nebraska 10/1/2013 ● ○ ○

New Hampshire 10/1/2013 ● ○ ○

New Jersey 10/1/2013 ● ○ ○

North Carolina 10/1/2013 ● ○ ○

North Dakota 10/1/2013 ● ○ ○

Ohio 10/1/2013 ● ○ ○

Oklahoma 10/1/2013 ● ○ ○

Pennsylvania 10/1/2013 ● ○ ○

South Carolina 10/1/2013 ● ○ ○

South Dakota 10/1/2013 ● ○ ○

Tennessee 10/1/2013 ● ○ ○

Texas 10/1/2013 ● ○ ○

Virginia 10/1/2013 ● ○ ○

West Virginia 10/1/2013 ● ○ ○

Wisconsin 10/1/2013 ● ○ ○

Wyoming 10/1/2013 ● ○ ○

Legend: ● = Yes; ○ = No

Sources: Centers for Medicare & Medicaid Services. | GAO-15-58

a

In November 2013, California launched online enrollment for the SHOP. However, the system was 

taken down in February 2014 and now California is only using direct enrollment.

b

Utah had an operational exchange for small employers prior to the enactment of the Patient 

Protection and Affordable Care Act.

c

Idaho originally planned to establish an SB-SHOP, but ultimately elected to use the FF-SHOP 

platform. We therefore consider Idaho as having an FF-SHOP in 2014 for the purposes of our report.
Appendix II: State-Based Small Business 

Health Options Program (SB-SHOP) 

Enrollment Generally as of June 1, 2014

Page 33 GAO-15-58 Small Business Health Insurance Exchanges

Highest enrollment plan

State 

Employer 

enrollment

Employee 

enrollment

Total 

enrollment

Average 

employees 

enrolled per 

employer Metal tier

Employee 

enrollment 

Total 

enrollment

Californiaa 1,360 6,667 9,563 4.9 Silver 1,749 2,499

Colorado 258 1,499 2,135 5.8 Silver 171 247

Connecticut 92 344 548 3.7 Silver 95 150

District of Columbia 211 525 714 2.5 Platinum 66 79

Hawaiib 398 851 2.1 7ac 228

Kentucky 58 341 442 5.9 Gold 92 124

Marylandd 15 65 76 4.3 Gold 6 13

Massachusetts 729 1,840 3,324 2.5 Platinum 240 409

Minnesota 159 790 1,178 5.0 Gold 57 87

Mississippie 1 1 1 1 Gold 1 1 

Nevada 16 41 43 2.6 Gold 10 10

New Mexico 129 408 602 3.2 Gold 41 57

New Yorkf 3,964 6,390 10,023 1.6 Platinum 637

Oregong 57 329 5.8 Silver 41

Rhode Island 229 884 1,489 3.9 Gold 171 286

Utah 478 3,977 10,900 8.3 Gold 303 757

Vermonth 3,580 18,706 33,696 5.2 Platinum 4,535 8,436

Washingtoni 8 25 42 3.1 Silver 9 

Sources: SB-SHOPs. | GAO-15-58

Notes: Total enrollment reflects the total number of individuals (including the employees, spouses, 

and any dependent children) covered by SB-SHOP plans.

a

California provided data as of May 22, 2014.

b

Hawaii was not able to provide total enrollment.

c

In Hawaii, group plans are designated as “7a” or “7b,” which are the equivalent of platinum- and 

gold-tier plans, respectively.

d

Maryland provided the number of employers enrolled as of September 2, 2014, and the number of 

enrollees, including the plan with the highest enrollment, as of September 15, 2014. Maryland had 

two plans with 13 total enrollees; both plans were gold-tier.

e

Mississippi provided data as of July 1, 2014.

f

New York was not able to provide the number of employees enrolled for the highest enrollment plan.

g

Oregon was not able to provide total enrollment.

h

Vermont provided data as of June 13, 2014

i

Washington was unable to provide total enrollment for the highest enrollment plan.

Appendix II: State-Based Small Business 

Health Options Program (SB-SHOP) 

Enrollment Generally as of June 1, 2014
Appendix III: Small Business Health Options 

Program (SHOP) 2014 Average Monthly 

Premiums for Silver-Tier Plans

Page 34 GAO-15-58 Small Business Health Insurance Exchanges

Silver-tier SHOP plan average 

monthly premiums age 21

Silver-tier SHOP plan average 

monthly premiums age 40

Silver-tier SHOP plan average 

monthly premiums age 60

State Low Median High Low Median High Low Median High

Alabama $213 $262 $279 $272 $335 $357 $579 $711 $757

Alaska 480 491 523 613 627 669 1302 1332 1421

Arizona 165 217 449 211 278 574 448 590 1220

Arkansasa 236 236 236 302 302 302 641 641 641

California 180 247 355 230 316 453 488 670 963

Colorado 251 296 382 321 378 489 681 804 1038

Connecticut 339 352 359 429 449 459 911 954 974

Delaware 277 293 303 354 374 388 753 795 823

District of Columbia 186 231 304 249 310 408 536 666 879

Florida 230 257 303 295 329 387 625 698 821

Georgia 214 252 316 273 322 404 580 684 857

Hawaii 138 192 208 176 245 266 375 521 565

Idaho 199 256 313 255 327 400 541 695 849

Illinois 203 295 335 259 377 428 550 802 909

Indiana 281 306 330 359 391 421 762 830 894

Iowa 185 272 356 236 347 455 502 738 966

Kansas 204 216 326 261 276 417 554 586 886

Kentucky 213 233 302 273 295 365 579 626 775

Louisiana 234 264 293 299 337 374 635 717 795

Maine 264 280 324 338 358 414 718 759 878

Maryland 183 271 354 233 346 453 495 735 961

Massachusetts 215 262 371 253 308 437 429 523 743

Michigan 151 280 346 193 358 442 410 761 939

Minnesota 193 251 309 247 321 400 524 681 861

Mississippi 243 246 264 310 314 337 658 667 715

Missourib 251 278 304 321 355 389 681 754 826

Montana 241 256 268 308 327 343 654 694 728

Nebraska 189 262 325 241 335 416 513 711 882

Nevada 199 226 356 255 289 456 541 614 967

New Hampshirec 284 284 284 363 363 363 771 771 771

New Jersey 280 382 411 312 425 458 511 696 750

New Mexico 224 270 312 287 345 399 609 732 847

New Yorkd

North Carolina 309 317 323 395 405 413 838 859 878

Appendix III: Small Business Health Options 

Program (SHOP) 2014 Average Monthly

Premiums for Silver-Tier Plans
Appendix III: Small Business Health Options 

Program (SHOP) 2014 Average Monthly 

Premiums for Silver-Tier Plans

Page 35 GAO-15-58 Small Business Health Insurance Exchanges

Silver-tier SHOP plan average 

monthly premiums age 21

Silver-tier SHOP plan average 

monthly premiums age 40

Silver-tier SHOP plan average 

monthly premiums age 60

State Low Median High Low Median High Low Median High

North Dakota 244 253 263 312 323 336 663 686 713

Ohio 228 278 330 292 355 421 620 755 895

Oklahoma 166 220 268 212 281 342 451 598 727

Oregon 197 283 347 252 361 443 535 768 941

Pennsylvania 186 240 306 238 306 391 506 651 830

Rhode Island 211 245 257 269 313 328 572 665 697

South Carolina 283 297 303 361 379 387 767 806 822

South Dakota 239 263 273 305 336 349 649 713 741

Tennessee 225 243 310 287 311 396 609 660 840

Texas 207 259 282 264 331 360 562 703 765

Utah 162 200 247 240 296 365 486 599 741

Vermonte 395 422 429 395 422 429 395 422 429

Virginia 195 260 359 249 333 459 527 706 975

Washington 268 278 294 342 355 376 727 753 799

West Virginiaf 296 296 296 378 378 378 803 803 803

Wisconsin 224 282 450 286 361 576 608 766 1222

Wyoming 337 355 383 431 454 490 915 964 1040

Sources: GAO analysis of Centers for Medicare & Medicaid Services and state-based SHOP data. | GAO-15-58

Notes: All premiums have been rounded to the nearest dollar.

a

The Arkansas SHOP only had one plan available.

b

The Missouri SHOP only had two plans available.

c

The New Hampshire SHOP had only one plan available.

d

Premium data from New York was not available. 

e

Vermont does not allow variation in plan premiums based on age.

f

The West Virginia SHOP had only one plan available.
Appendix IV: Small Business Health Options 

Program (SHOP) Silver-Tier Plan Availability

Page 36 GAO-15-58 Small Business Health Insurance Exchanges

State 

Total 

silver-tier 

plans

Issuers 

offering 

silver-tier 

plans

Plans 

available in 

all counties

At least 

two plans 

in each 

county

At least 

two issuers 

in each 

county

Alabama 5 2 ● ● ●

Alaska 8 2 ● ● ●

Arizona 44 5 ● ● ●

Arkansas 1 1 ● ○ ○

California 11 6 ● ○ ○

Colorado 31 7 ● ● ●

Connecticut 3 3 ● ● ●

Delaware 4 2 ● ● ●

District of Columbia 89 7 ● ● ●

Florida 17 5 ● ○ ○

Georgia 7 3 ● ○ ○

Hawaii 13 2 ● ● ●

Idaho 17 3 ● ● ●

Illinois 20 3 ● ● ●

Indiana 58 2 ● ● ○

Iowa 28 5 ● ● ○

Kansas 3 2 ● ○ ○

Kentucky 8 4 ● ● ●

Louisiana 12 4 ● ● ●

Maine 4 2 ● ● ●

Maryland 29 13 ● ● ●

Massachusetts 19 10 ● ● ●

Michigan 21 8 ● ○ ○

Minnesota 22 3 ● ● ○

Mississippi 3 1 ● ● ○

Missouri 2 2 ● ○ ○

Montana 10 3 ● ● ●

Nebraska 14 4 ● ● ●

Nevada 6 2 ● ● ○

New Hampshire 1 1 ● ○ ○

New Jersey 11 3 ● ● ●

New Mexico 21 5 ● ● ●

New Yorka ○ ○ ○

Appendix IV: Small Business Health Options 

Program (SHOP) Silver-Tier Plan Availability
Appendix IV: Small Business Health Options 

Program (SHOP) Silver-Tier Plan Availability

Page 37 GAO-15-58 Small Business Health Insurance Exchanges

State 

Total 

silver-tier 

plans

Issuers 

offering 

silver-tier 

plans

Plans 

available in 

all counties

At least 

two plans 

in each 

county

At least 

two issuers 

in each 

county

North Carolina 4 1 ● ● ○

North Dakota 6 3 ● ● ●

Ohio 39 6 ● ● ●

Oklahoma 22 3 ● ● ○

Oregon 28 8 ● ● ●

Pennsylvania 44 9 ● ● ○

Rhode Island 5 3 ● ● ●

South Carolina 5 3 ● ● ●

South Dakota 7 3 ● ● ●

Tennessee 4 2 ● ○ ○

Texas 9 2 ● ● ○

Utah 33 3 ● ● ●

Vermont 6 2 ● ● ●

Virginia 13 5 ● ○ ○

Washington 3 1 ○ ○ ○

West Virginia 1 1 ● ○ ○

Wisconsin 59 9 ○ ○ ○

Wyoming 5 2 ● ● ●

Legend: ● = Yes; ○ = No

Sources: GAO analysis of Centers for Medicare & Medicaid Services and state-based SHOP data. | GAO-15-58

a

Data on the total number of silver plans and the number of issuers offering silver plans was not 

available for New York.
Appendix V: Comments from the Department 

of Health and Human Services

Page 38 GAO-15-58 Small Business Health Insurance Exchanges

Appendix V: Comments from the Department 

of Health and Human Services
Appendix V: Comments from the Department 

of Health and Human Services

Page 39 GAO-15-58 Small Business Health Insurance Exchanges
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 40 GAO-15-58 Small Business Health Insurance Exchanges

John E. Dicken, (202) 512-7114 or dickenj@gao.gov

In addition to the contact name above, Randy DiRosa, Assistant Director; 

Priyanka Sethi Bansal; Sandra George; Eagan Kemp; Laurie Pachter; 

and Kate Tussey made key contributions to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(291189)
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