WASHINGTON — Beset by problems with the rollout of the president's healthcare law, the Obama administration has postponed for at least a year its plans to allow small businesses in many states to use a website to select health insurance plans for their employees.
Officials said they needed to concentrate on fixing the HealthCare.gov website that is supposed to allow individual consumers who don't get health benefits at work to sign up for coverage.
The postponement is another major setback for the president's hopes of showcasing how the Affordable Care Act can help consumers and small businesses get health insurance. And political opponents quickly pounced on the latest bad news.
Instead of a website, small employers in about three dozen states that wish to offer their employees coverage will have to go through insurance brokers or deal directly with insurance companies, as many already do. Small businesses that do enroll their employees in health insurance plans that meet new standards in the Affordable Care Act will remain eligible for tax credits provided by the law.
The administration's announcement does not affect businesses in states, including California, that are operating their own Obamacare marketplaces, many of which have been successfully enrolling people. California opened its small-business online marketplace this week after a delay.
The announcement also does not affect large employers, which were not eligible to use the online system. The vast majority of large businesses already offer health coverage.
Because small businesses in every state can still sign up their workers through brokers or insurers, the lack of an online enrollment system in many states may not have a large, short-term impact on coverage.
That did little to lessen the political sting, however.
"It's another broken promise and more proof this administration's assurances have no credibility," House Speaker John A. Boehner (R-Ohio) said. "This law has been an absolute disaster, leaving us to ask, 'What's next?'"
Several leading business groups also reiterated their reservations about the law.
In addition to the small-business marketplace, the Obama administration has also delayed other elements of the law, including a one-year hiatus in enforcement of a penalty on large employers that do not provide health coverage.
Administration officials said they hoped that a website allowing small employers to shop online would be operational by next November so that employers can select plans for 2015.
"It was important for us to prioritize the functionality that would enable consumers individually to shop and enroll online," said Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services, which is working on the websites.
The agency has been focused for the last two months on rescuing HealthCare.gov and meeting Saturday's self-imposed deadline for making the site usable for the "vast majority" of users.
The small-business marketplaces — known as SHOP exchanges, for Small Business Health Options Program — were supposed to offer small employers the ability to compare health plans for their employees online and select among several options.
But development of the federal SHOP marketplaces has been dogged by many of the same technical problems that led to the disastrous rollout of the online marketplaces for individual consumers.
"It's disappointing," said John Arensmeyer, chief executive of Small Business Majority, a business group that has supported the Affordable Care Act. "It's important it get up and running as soon as possible."
Small businesses have long struggled with high health costs and have been less likely than large companies to offer health benefits.
Just 57% of firms with three to 199 employees offer health insurance, according to an annual survey by the Kaiser Family Foundation and the Health Research & Educational Trust. By comparison, 99% of firms with more than 200 employees have health benefits.
The Affordable Care Act exempts businesses with fewer than 50 employees from a new requirement that employers offer health benefits.
But architects of the law hope several of its provisions will encourage more small employers to begin offering benefits.
The law offers tax credits to small businesses with fewer than 25 full-time employees and average wages under $50,000 a year to help those companies offset the cost of health benefits.
The SHOP marketplaces were to be the centerpiece of the law's benefits for small employers, simplifying the often daunting task of picking out a health plan or contracting with a health insurance company.
A firm was supposed to be able to choose a plan for its employees or give its employees the ability to select a plan among options offered on the marketplace. The administration already had said that in states relying on the federal government website, the selection option would not be available to businesses until 2015.
Some experts believe competition among plans will help drive down prices. And growing numbers of large businesses are turning to similar private insurance marketplaces to control their costs.
"The marketplace is still the most important provision in the Affordable Care Act for small businesses," Arensmeyer said Wednesday.
Bataille said federal officials were working to build a website that would allow businesses to at least compare insurance plans in their areas.
And she emphasized that even though it would be impossible to enroll online, qualifying small businesses can still get tax credits.
"We expect that making direct enrollment, tax credit application and comparison shopping easier will help to ensure that small businesses can take full advantage of the marketplace and tax credits … in 2014," Bataille said.
But the Obama administration's apparent inability to build some of the basic tools of the Affordable Care Act has even some of the law's supporters shaking their heads.
"This is a great example of why California made the right choice" in deciding to operate its own marketplace, said Peter V. Lee, director of Covered California.
Times staff writer Chad Terhune in Los Angeles contributed to this report.