According to a new report released today, average premiums offered on the new individual government healthcare exchanges are comparable to and sometimes less than their employer-sponsored counterparts.
The data might intrigue business owners grappling with rising health-care costs and changes related to 2010’s Affordable Care Act. In 2017, states will have the option to open exchanges to companies with more than 100 employees. If patterns continue, exchanges could be a viable alternative for employers in coming years.
The study, conducted by PwC’s Health Research Institute, reviewed insurance policies from 15 state exchanges and the District of Columbia, as well as exchanges run by the government in any remaining states. Data from median and low-cost premiums were then compared to survey data of employer-sponsored premiums from 156 million people in 2013.
Government exchange plans offer four plan levels: bronze, silver, gold and platinum, paying 60 percent, 70 percent, 80 percent and 90 percent of an individual's healthcare costs, respectively. Employer-sponsored plans typically pay around 85 percent of a person's healthcare costs, making the average employer-sponsored plan the counterpart of gold or platinum exchange plans.
According to the study, “across the board, at every level, average exchange premiums are lower than this year’s average premiums for employer-based coverage.” Researchers found that the average median premium gold plan was 8 percent lower than the national average employer premium. The average of the lowest premium for gold plans was 27 percent lower.
Not factored into this analysis were subsidies that employers offer to offset costs or federal tax credits for which a majority – 85 percent -- of enrollees to Obamacare are eligible.
Of course, there are some important differences to note. Exchange plans often have limited choices for doctors and hospitals and much narrower provider networks. Also, the data from this study examines rates from the government exchanges’ first year and it’s not known if these patterns will continue.
Additionally, to be a true alternative, the government’s business exchanges would need to be robust. Currently, Obamacare’s business exchanges offer few plan options, though that’s expected to change in 2015.
Still, if patterns continue, exchanges might give businesses a viable alternative that helps control costs. As the study notes, exchanges, “may provide an opportunity for employers to reexamine new approaches to providing health insurance coverage for their workers.”
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