Public Exchanges

Public Exchanges Competitive With Employer-Sponsored Plans

January 30, 2014

Premiums for health plans on new state exchanges under the Affordable Care Act are comparable to – and in some cases lower than – those being offered by employers with similar levels of coverage, according to a study released Thursday by PricewaterhouseCooper’s Health Research Institute.

HRI analyzed the average premium costs for a working population nationally in the public exchanges, and calculated that the median 2014 premium for a plan with coverage similar to that of the average employer-sponsored plan was $5,844. By comparison, the average employer premium for a single worker was $6,119, a difference of 4%. The premiums do not include subsidies.

The ACA allows for consumers to shop on its 51 new state exchanges within four plan levels; these include bronze, which pays 60% of healthcare costs; silver, which covers 70%; gold, which covers 80%; and platinum, which covers 90% of the bill.

Currently, employer-sponsored health plans cover about 85% of healthcare costs, with the remaining costs being charged to employees, the PwC study states.

Across the board, at every level, average exchange premiums are lower than this year’s average premiums for employer-sponsored coverage, according to the data.

“Employers may be surprised that exchange premiums in 2014 are comparable to employer premiums and in some states significantly lower than employer-based premiums,” says the report. “Employers contemplating future limits to their health care spending could face less resistance if employees are given a wider range of options at different price points via an exchange.”

The report cautions, however, that future fluctuations in public exchange rates are possible because health plans are competing under a new set of underwriting rules which provide some protections against financial risk. “As a result of this uncertainty, the first-year exchange rates vary significantly. It may take several years for this new market to reach equilibrium,” it says.

HRI’s analysis is based on data of employer-sponsored premiums of 156 million people in 2013. The analysis compares the premiums paid by employers for single worker coverage to premiums paid for similar coverage in the state exchanges.

Comments (6)

Posted by: Jeffry P | January 30, 2014 5:11 PM

Mr. Giardina:Given the California exchange options, I am not so sure you would want you or your family covered under the plans. Access to doctors and quality facilities is a big problem. Out of pocket maximums have greatly increased. There are location in CA that have no networks and from what I have heard the doctors don't want the programs. Small Business are taking the brunt of the "smoke and mirror" side show. Really, perhaps you might lookup while "walking and testing" before you receive the bills from your next hospital stay!

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Posted by: charles T | January 30, 2014 3:03 PM

Mr. Giardina, Please look at the label on the Kool Aid you are drinking. The benefits being received are so far worse than anything pre-ACA. By what base of knowledge and experience are you willing to blindly accept what the HRI is saying. I have over 30 years experience in this industry, a Masters in Economics, CLU, ChFC and am a Certified Employee Benefit Specialist, working with small businesses. This law is disruptive at best and destructive at worst to small business.

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Posted by: Henry C | January 30, 2014 2:38 PM

The plans may be competitive on the surface, but only on the surface. The exchange plans severely limit the number of hospitals and the number of doctors as compared with employer plans. It does seem very likely that the HRI report was written in order to support a predefined conclusion.

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Posted by: Jorge E | January 30, 2014 2:21 PM

In Florida we have the Federal Marketplace. In Miami-Dade county we had 721 plans being offered to the non-group market until Dec. 31, before PPACA, now there are ONLY 31 plans, in some other counties the number dwindles down to eight plans!!. ALLl plans offer a very diminished list of hospitals and medical providers, and most of the new plans have higher than ever deductibles and out-of-pockets of $6,350. such OOPs were shunned by most applicants before as they were considered "catastrophic" plans. New plans under ACA for non-groups have between 20 to 50% higher premiums from similar plans from before ACA. Group renewals premiums were for years in the neighborhood of 2 to 9%, but group renewals after Jan. 1 are higher than 40%, most falling between 75% to 116%. These are indisputable facts!. On another note, many employers will stop offering health insurance to their employees, for reasons of economics, and for one simple reason, if they no longer will be denied coverage for their own pre-ex medical conditions they may as well apply for non-group coverage even if the plans suck and the premiums are outrageous, but they will save paying for the employees'. My prediction is becoming truer by the minute: by the end of March ACA may have succeeded in enrolling no more than 3 million individuals but some 9 million other who had coverage before would have lost it. I believe that the rest of the article and HRI's conclusion ... are nothing more than pure political propaganda at best.

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Posted by: Bill F | January 30, 2014 11:39 AM

his is an apple to orange comparison. the State and federal exchange policies have a much smaller network. the exchange policy in many states do not even offer a PPO option that is the standard in most employer plans. This is disgraceful propaganda. The IRS just released a 43 pdf file imploring the industry to develop a wrap to make up for the network difference. Funny PWC missed it . Wonder who paid them for the study?

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Posted by: Jorge R | January 30, 2014 11:22 AM

Dear Mr. Giardina, Could you share the report? It would be most helpful to look at the data.

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