Unhappy with the choices her insurance broker was offering, Denver publishing company owner Rebecca Askew went to Colorado's small business health insurance exchange last fall. She found exactly what she'd been hoping for: affordable insurance options tailored to the diverse needs of her 12 employees.

But Askew is in a tiny minority. Only 2 percent of all eligible businesses have checked out Small Business Health Options Program exchanges in the 15 states where they have been available since last October under the Affordable Care Act. Even fewer purchased policies.

In November, three more state-run SHOP exchanges are slated to open, and the federal government will unveil exchanges for the 32 states that chose not to run their own.

SHOP exchanges were supposed to open nationwide on Oct. 1, the same day as exchanges offering health insurance for individuals. But the Obama administration postponed the SHOP launch, citing the need to fix serious technical problems with the exchanges for individuals, which it said were a higher priority.

So far, only the District of Columbia and 15 states California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Nevada, New Mexico, New York, Rhode Island, Utah, Vermont and Washington have launched small business exchanges. Three more Maryland, Mississippi and Oregon will also start their own exchanges.

"It's easy to explain why (small business exchanges) have gotten off to a slow start," said Linda Blumberg, a researcher with the Urban Institute who is tracking their development with support from health care advocates, the Robert Wood Johnson Foundation. The delay of small business exchanges in most states confused business owners in the few states that actually offered exchanges, she said.

Also, insurance companies encouraged business owners to renew their plans before the October 2013 deadline to avoid having to sign up for a new policy during the first year of the controversial ACA rollout. The Obama administration allowed even noncomplying plans to be renewed, after complaints from individuals and business owners who had received cancellation notices.

As a result, not as many businesses needed to look for new policies for their employees as was originally projected. To be successful, SHOP exchanges must attract a large pool of businesses that can exert market pressure on insurance carriers and ultimately bring down prices. Whether that will happen remains to be seen.

HOW IT WORKS

The ACA offers businesses with fewer than 50 employees the opportunity to purchase health insurance coverage for their workers through a SHOP, but it does not require them to do so.

These firms comprise 5.8 million of the 6 million firms in the U.S. and employ at least 37 million Americans. More than 96 percent of larger corporations cover their employees, while only 59 percent of very small companies provide insurance for their workers. As a result, nearly half of the nation's 47 million uninsured people are self-employed or work for a small company, according to 2012 data from the Kaiser Family Foundation.

Under the health law, a federal tax credit that can cover up to half the cost of an employer's share of premiums is available to businesses that have fewer than 25 employees and average annual wages of less than $50,000. The federal government estimates 4 million small businesses will qualify, resulting in $40 billion in subsidies over the next 10 years.

But so far, not many companies have taken advantage of the offer, according to a report by the Government Accountability Office. In the 2010 tax year, only 170,300 businesses received a credit, amounting to just $428 million, according to the report.

"A lot of folks complained that they needed to hire an accountant to figure it out," Blumberg said. "You couldn't even get a rough idea whether you qualified." Insurance brokers have also complained about how difficult it is to determine eligibility for a credit, and suggest the federal government should create some kind of easy-to-use calculator.



In Colorado, the percentage of people employed by small businesses is even higher than in much of the rest of the country. "There aren't exactly a lot of corporate headquarters here," said the state exchange's chief strategy officer, Marcia Benshoof. "Colorado is a state of small business. We have some very passionate folks here who care about this market," she said.

A few other states have entered partnerships with the federal government to use the federal website but plan to provide their own marketing and outreach. All states regulate the insurance companies that offer their policies on and off the exchange.

Over the past decade, insurance premiums for small firms have increased 123 percent. Currently, small businesses pay up to 18 percent more than larger businesses for health insurance, according to the Council of Economic Advisers.

The health law requires SHOP exchanges to include a feature known as "employee choice," in which individual workers can pick from a variety of policies offered by different insurance companies, similar to the menu of health benefit options larger companies offer employees.

"When we talk about why they should use the exchange, choice is the meaningful part of that conversation. That's the moment of truth with employers," Benshoof said. Besides creating goodwill, studies show that offering employees a choice of health plans often results in lower overall health care costs, because employees tend to choose the lowest-priced plans that offer the most value for their individual needs, according to the National Bureau of Economic Research.