Marketplace plans cost less than average employer-sponsored plan

Premiums for Patient Protection and Affordable Care Act (ACA) plans available on the health insurance exchange actually compare favorably—at 10 percent lower—than premiums for the average employer-sponsored plan, according to a recent study from the Urban Institute. The study, Are Nongroup Marketplace Premiums Really High? Not in Comparison with Employer Insurance, compared unsubsidized nongroup premiums for plans available on the ACA-created marketplace with the average premium for employer-sponsored plans, according to state and metropolitan area, and factoring in adjustments for differences in actuarial value and age distribution.

Specifically, the study found that nationally, the average second-lowest-cost silver nongroup premium for single coverage was 10 percent lower than the average employer-sponsored plan. And, in 39 states and the District of Columbia, the average 2016 second-lowest cost silver premium was lower than the average employer-sponsored single premium. The exceptions were Alaska, Arkansas, Delaware, Georgia, Louisiana, Missouri, Nebraska, North Carolina, South Dakota, Vermont, West Virginia and Wyoming.

Finally, out of the 32 large metropolitan areas that were studied across the country, four—San Francisco, Atlanta, New Orleans and Charlotte, North Carolina—had higher nongroup premiums (second-lowest-cost silver) than the average for employer-sponsored insurance when using the actuarial value and age-distribution adjustments.

Possible reasons the majority of states and metropolitan areas do have relatively low ACA plan premiums compared to employer plans may include narrower networks, market characteristics including transparency and comparability, and the underpricing noted by plans in some markets.

The researchers concluded that the level and growth of nongroup marketplace premiums should not be interpreted as evidence of market weakness. “Nongroup insurance, when adjusted to make its premiums comparable to employer premiums, is much more often than not lower cost than the average coverage offered through employers,” the study authors wrote. “But the persistent, uncomfortable truth is that health care is an expensive commodity, regardless of the market in which one purchases it.”


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