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Public Exchanges Competitive with Employer-Sponsored Plan

Originally posted January 30, 2014 by Michael Giardina on https://eba.benefitnews.com

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  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.