Press Release

Embargoed Until Contact

September 18, 2014

Sue Ducat
Director of Communications
(301) 841-9962


Employee Choice


A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation looks at health coverage choice for employees of small businesses. Unlike large organizations, small businesses have been less likely to provide comprehensive health insurance or a choice of plans, and their employees are more likely to be uninsured or underinsured. To address this insurance gap, the Affordable Care Act (ACA) created the Small Business Health Options Program (SHOP) Marketplaces in each state. (Note: The SHOP exchange was the subject of an earlier Health Policy Brief.) These Marketplaces (eighteen run by state exchanges, thirty-three by the federal government) will provide "one stop shopping," for small businesses to compare health plans and enroll their employees. To make SHOP Marketplaces more attractive to small businesses, the ACA required SHOP Marketplaces to offer a feature known as employee choice, in which employers can offer their employees a choice from multiple health insurance plans. While the majority of state-based SHOP Marketplaces have chosen to offer access to multiple plans, employee choice will not be mandatory until 2016. This Health Policy Brief examines the issue of employee choice, the status of its implementation, and whether the concept is successfully attracting more small businesses to offer coverage through SHOP Marketplaces.


Topics covered in this brief include:


    • What's the background? Building on previous efforts, the ACA created SHOP Marketplaces in each state that allow small employers to compare a variety of health insurance plans side by side and reformed insurance rules throughout the small-group market to ensure a level playing field inside and outside of the SHOP. When the ACA established the SHOP Marketplaces, it intended employee choice to be available in all SHOP Marketplaces beginning in 2014. However, the Department of Health and Human Services (HHS) later delayed the employee-choice requirement until 2015. Then, in another rulemaking, HHS allowed insurance commissioners to recommend an additional one-year delay of employee choice in their states until 2016, if they believed such a delay would be in the best interests of small employers, their employees, and dependents. The brief provides a state-by-state progress report on SHOP Marketplace implementation. 

    • What's the debate? While offering employee choice in SHOP Marketplaces enjoys stakeholder support, some insurers fear that allowing employees more choices will result in higher premiums. Another concern raised by insurers is whether the complex formulas required to implement employee choice in the Marketplaces' infrastructure could lead to improper allocation of insurer payments. The brief outlines how employee choice will be implemented and shows examples of how some states' SHOP Marketplaces will attract enough plans to offer a range of choices.
    • What's next? To date, implementation of employee choice has been uneven across the country, but enrollment data is limited. As more data becomes available, it will be important to evaluate how employers are providing a choice of plans and which are more appealing and their effects on adverse selection, competition, and premiums.

    NOTEThis Health Policy Brief is based on the authors’ ongoing research at Georgetown University Health Policy Institute supported by The Commonwealth Fund.

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.