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Utah may relinquish control of successful small-business health insurance exchange

Utah's successful small-business health insurance marketplace, Avenue H, may end up under the management of the federal government.
Utah's successful small-business health insurance marketplace, Avenue H, may end up under the management of the federal government.
Adobe stock photo

SALT LAKE CITY — Utah's successful small-business health insurance marketplace, Avenue H, may end up under the management of the federal government.

Members of Utah's Health Reform Task Force voted Thursday to relinquish control of the small-business marketplace, as it is costing the state $1.5 million annually to implement, some of which is collected in fees from small businesses.

Avenue H, however, is "very much open for business," said Patty Conner, director of the state's Office of Consumer Health Services, which runs Avenue H.

Conner said it is much too early to know the fate of the marketplace.

Coverage options are more limited, dwindling from up to four insurance carriers and more than 70 available plans in past years to just two carriers and 28 plans to choose from this coming year.

Neither of the 2017 plan carriers — SelectHealth and HSA Health Plan — offer out-of-state health care options, which means Utah businesses that employ people living out of state are forced to look elsewhere for insurance options.

Utah has been running Avenue H since before the Affordable Care Act mandated small-business health care options in each state. When health care reform was implemented nationwide, though, Utah received permission from the federal government to keep Avenue H but allow individuals needing health insurance to use the federal marketplace known as

It was an unprecedented "bifurcated model" that was copied in at least one state, Mississippi.

Other states tried similar models but ultimately failed. The federal government ended up bailing them out and running their small-business marketplace for them. The federal government now manages exchanges in 33 states.

Rep. Jim Dunnigan, R-Taylorsville, chairman of the Health Reform Task Force, said the small-employer exchange hasn't turned out as it was initially believed it would. Private options and other things happening in the market have "taken away the attractiveness of the exchanges," he said.

Originally, the Affordable Care Act promised multiple choices for employers, potentially smaller premiums because of a larger number of participants in the risk pool, and it also offered a small-employer tax credit, which Dunnigan said "hasn't turned out to be much of a benefit."

Dunnigan congratulated Conner for the success of Avenue H, but said the marketplace and its costs should ultimately be the responsibility of the federal government.

Despite the task force voting to notify the federal government of Utah's decision to relinquish control of the small-business marketplace, nothing will happen until at least January 2018.

None of the 2017 plans will be impacted, Conner said.

Avenue H has 800 small businesses currently participating, insuring about 14,500 members, including employees and their dependents. Utah has the third-highest enrollment of any state, behind California and New York. Enrollment in Utah has grown every year the marketplace has been available.

"We've had great participation from small businesses and brokers," Conner said, adding that "a competitive marketplace is important."

She speculated that even though Utah's marketplace has done well, exchanges across the country are collapsing under continued premium increases and increasingly limited options for health care.

"Utah is definitely at the top of the pack in state-based exchanges," Conner said.

Avenue H gets $750,000 from the state general fund each year and then makes up for additional costs to implement the program and manage plans through fees charged to small-business owners who participate.

Conner said the state has time to work through other options but needs to notify the federal government as soon as possible.

In notifying the federal government, Dunnigan believes Utah could negotiate a different model, allowing small businesses to perhaps secure their own insurance options directly, not using the federal marketplace. That would also maintain some plan management at the state level.


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