By Sam Baker - 05/31/13 05:58 PM EDT
The Obama administration confirmed Friday that it will delay part of a new program for small businesses under President Obama's healthcare law.
Some congressional Democrats, including Sen. Mary LandrieuMary LandrieuLouisiana needs Caroline Fayard as its new senator La. Senate contender books seven-figure ad buy Crowded field muddies polling in Louisiana Senate race MORE (D-La.) have criticized the delay, which will prevent small-business employees from choosing among multiple healthcare plans.
But the Health and Human Services Department (HHS) said Friday it intends to follow through on the delay.
The healthcare law allows small businesses to either offer a single plan to all of their workers or pick a certain benefit level and let workers choose among plans at that level.
HHS has delayed the latter option for one year, saying it's too complicated for insurers to implement right away.
Small businesses will still be able to access SHOP exchanges as planned in 2014, but they'll have to choose one plan for the whole company. Employees won't be able to choose for themselves until 2015.
HHS said the SHOP exchanges still offer important benefits to small businesses. Plans sold there must provide certain benefits and meet other minimum standards, and SHOP exchanges will still function as competitive marketplaces.
"We believe that because of this strong value proposition, the SHOP may still have robust enrollment despite the adoption of this transitional policy," the department said in a final regulation on the SHOP exchanges.
The department also said it would not extend the delay beyond one year.
Currently, insurers compete to offer their plans to large employers because those companies can bring a large number of customers to the table. But small businesses have a harder time getting a good deal and typically end up with plans that carry higher premiums or out-of-pocket costs.
The current market is even harder for people who buy insurance on their own, rather than getting it through an employer of any size.
The healthcare law aimed to "rationalize" the marketplace for individuals and small businesses by creating insurance exchanges in each state.
The exchanges are designed to appeal to insurance companies because they offer a large, concentrated customer base, and to leverage that competition into better deals for consumers.