LOS ANGELES -- California formally launched its insurance exchange for small businesses Monday as questions loom about potentially higher rates and just days after the federal government said it was shelving its version of the online portal for a year.

The nation's most populous state runs its own insurance marketplace, Covered California, and officials have been quick to distinguish it from the troubled federal system that serves 36 other states.

Last week, the Obama administration said it would put off until next November its online small-business site while it concentrates on repairs to the HealthCare.gov website for individuals.

Covered California launched its online site for individuals and families Oct. 1. At a news conference in Los Angeles, agency officials said the small-business counterpart would offer affordable choices for companies that want to provide compensation packages to their workers, including health care.

"California is moving forward, and we are not impacted by the federal government's decision" to delay its site, said Peter Lee, executive director of Covered California.

It's not clear how many companies will sign up, in part because employers can direct workers to find insurance through the Covered California site for individuals. The small-business program is voluntary -- companies with up to 50 full-time workers are not required under the health law to provide insurance for workers.


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Some owners could qualify for tax credits. Coverage would begin in January.

John Kabateck of the National Federation of Independent Business in California said many small companies have received insurance rate increases, while others fear recently renewed policies could be canceled, leading to higher prices next year. The advocacy group opposed the health overhaul.

For small businesses, the law is creating "more incentive, sadly, to detach from insurance," he said.