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Competitive Obamacare prices may lure employers

A new report says health plans sold on the ACA exchange are 4% lower than those of the average employer-provided plan.

By Money Staff Jan 30, 2014 1:08PM

This post comes from Dan Mangan at partner site CNBC.


CNBC on MSN MoneyThe phrase "sticker shock" has made headlines in stories about individual Obamacare enrollees, but premium prices for health insurance plans sold on Obamacare exchanges nationally are actually about the same -- and in some cases cheaper -- than premiums for comparable employer-offered plans, a new analysis reveals.


Doctor sitting in office with patient talking and smiling © Paul Bradbury, OJO Images, Getty ImagesIf that trend holds in coming years, employers may strongly consider moving their workers into those public Obamacare exchanges for health coverage, once that is an option in 2017, a report released Thursday by PwC's Health Research Institute said. That could land millions more people in those exchanges.


"There's been a perception that the plans on the exchanges were not a good deal, that they were either a lot more expensive, or didn't provide much in the way of coverage," said Ceci Connolly, managing directly of PwC's HRI.


Given that, Connolly said, "we were a little bit surprised" when PwC crunched the price data and found "the exchanges are competitive, and even cheaper in some instances." She also said that PwC clients "have been very intrigued by" the results.


The report found that the median rate of Obamacare exchange-sold plans that offer coverage comparable to employer-offered plans is $5,844 annually.


That's 4 percent less than the $6,119 for the average cost of an employer-provided plan of comparable benefits coverage, the report found.


If consumers opted for the lowest-priced Obamacare plans in each state, the price difference was even more dramatic: 20 percent less, at an average cost of $4,885.


"Across the board, at every level, average exchange premiums are lower than this year's average premiums for employer-sponsored coverage," the report said.


However, the report warned, "it remains to be seen whether the these patterns will continue over time."


The analysis also noted that "many of the exchange plans have narrower provider networks, with more limited choices of doctors and hospitals," than employer-offered plans. Such so-called "narrow networks" have held down the costs of exchange plans.


As insurers gain more experience selling on the exchanges, and as several Obamacare provisions that limit insurers' losses in the first few years are removed, "premiums could change substantially in the public exchanges."


Courtesy CNBCBut if the price trend continues -- with costs being cheaper on the exchanges -- "this may provide an opportunity for employers to re-examine new approaches to providing health insurance coverage for their workers," the report said.


For its analysis, PwC looked at the price of Obamacare plans sold in the "gold" and "platinum" plans, the highest-priced options on the exchanges. A gold plan covers about 80 percent of a person's health-care costs, while platinum covers about 90 percent. Those plans were used because employer-offered health plans tend to cover about 85 percent of health-care costs -- exactly halfway between the two exchange tiers.


And PwC did not factor in the subsidies that most employers offer workers to offset the cost of their health coverage, nor did it factor in the federal tax credits that an estimated 85 percent of Obamacare exchange enrollees will be eligible for to lower their out-of-pocket premium payments.


Most people buying coverage on the Obamacare exchange either had previously bought coverage in the individual market or didn't have insurance last year. Few have the option of buying employer-sponsored coverage. Some of the people who have moved from the traditional individual market to the Obamacare exchanges have been unpleasantly surprised by higher premiums for their new plans.


As of January, more than 3 million people have selected plans from one of the new government-run Obamacare exchanges, which are selling insurance to help people comply with the Affordable Care Act mandate that they obtain health coverage by 2014 or pay a tax penalty. The exchanges, including the federally run HealthCare.gov, offer consumers a menu of competing plans by private insurers.


Asked about PwC's findings, Health and Human Services spokeswoman Joanne Peters said: "The health-care law is making insurance affordable for millions of Americans."


"We're thrilled that 3 million Americans have already selected plans, and we will continue an aggressive outreach campaign to get as many Americans enrolled as possible," she said.

Most Americans—more than 156 million of them—get health coverage through employer-offered insurance.


Beginning in 2017, employers will have the option, if the Obamacare exchanges in their respective states allow it, of having their workers obtain coverage through such an exchange. The employer can, as most do currently, subsidize the cost of the insurance purchased for their employees.


Connolly said, "Employers today are frustrated by the cost and hassle of providing health insurance, so they are looking for an affordable alternative to keep their employees healthy."


"This may be an option for employers in the not-too-distant future," Connolly said. "This data suggests this will be a competitive market."


The PwC report noted that health providers, including some higher-cost medical centers that have refused to negotiate inclusion in narrow networks, may rethink that strategy if a large number of people flock to the Obamacare exchanges.


Likewise, insurers "may face increased demand from employers to replicate less costly plans offered on the public exchanges," the report noted. "In particular, insurers may need to focus some resources on creating higher performance and higher-quality provider networks to replace or supplement traditional wide-access plans for all segment of the market."


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163Comments
Jan 30, 2014 1:39PM
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I love how they used the word "comparable".  Then they explain that yes, the obamacare package has a narrower choice of providers and doctors.  So, what will my deductible be under obamacare?  Right now my deductible is only $200 for a family of 4.  I'm guessing if it is switched to obamacare, it will be in the $1,000's.  So, no, it isn't comparable.
Jan 30, 2014 1:34PM
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what a cluster obamacare is, there is almost no good side to it for any responsible person. the freeloaders make out ok and the bill is pushed on to the working class and businesses that are left standing after the other clusters forced on us.  my rates have jumped 3 times in 1 year  and all were to copmply with the insane law.  we dont need this crap and those in congress as well as the whitehouse are just the middleman in a larger theift ring to force the working people to pay more to cover the base of voters who dont
Jan 30, 2014 2:05PM
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"Comparable"???? NOT even close!!! My small company's 2014 group policy cost was increased by 84.5% if I wanted to stay with a plan that was close to what I had in 2013. And by close, I mean it still had 100% co-insurance but the deductible doubled to the max allowed ($5,750 with $6,350 out of pocket max). If I wanted to come even close to what I was paying in 2013, I had to take a plan that had 80% co-insurance, the same max allowed deductible, and only 30% drug coverage... and that was still a premium increase of 25.7%! So I was forced to put everyone in the company on individual plans, the problem with that? I can't pay for them like I used to without getting a 3rd party involved. Now I have to pay $1,000 to have this 3rd party company set up my plans and then pay them $15 per employee every month (on top of the premium cost) just so I can pay for the cost of the health plans like I used to do with ease back in the good old days of 2013!!!! Affordable health care my poor, middle class behind!

Jan 30, 2014 1:55PM
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wise  up  America.    the  dems  and Obama  are  just   covering  their   assess on the  health  care  issue.   there is no  comparability  when the  coverage and the  deductibles  do not match.  don't  be  fooled this  time  around.   Obama  lied  before ...... he lies now

   reid and Pelosi covered for him   last  time  and  they  should  by  all  rights  in prison  for  their  role  in  passing   Obama  care  so  corruptly.

  we  the   people  need  to get  a grip and  file   impeachment  charges and  imprison  our  congressmen and women for  their lies and  corruption.


Jan 30, 2014 2:05PM
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I am not biting, this appears to be a shill for Obamacare. The program is collapsing under it's own wait and is in need of an infusion of new suckers, I mean buyers.

Jan 30, 2014 1:57PM
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I've already exited the insurance business.  I threw 177 employees off the BlueCross coverage and on to Obamacare.   I have lowered wages $1.00/hr to pay the Obamacare Tax on employers ($2000).   Employees say their insurance premiums are up 50%+, their co-pays have doubled, their deductibles are 2-3 times what they were, they have very limited doctor choices, and they resent having to pay for Obamacare.

I sure wouldn't want to be a democrat this November...

But I think I may buy myself a new fishing boat with the money saved...

Jan 30, 2014 2:19PM
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Folks, you get what you pay for.

Remember:

"If you like your plan ,you can keep your plan."

"If you like your DR., you can keep your Dr."

Smoke & mirrors & more Lies on top of it. 

Any questions?   I thought not.

 

 

Jan 30, 2014 2:09PM
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what liberal put this article together?
Jan 30, 2014 2:03PM
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I think this article is saying that "comparable" means "Exactly the same, only different"!  Is this a ploy to loll people into thinking Obamacare is actually a viable option?  I guess time will tell, and the clock is ticking!!!
Jan 30, 2014 1:52PM
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If the trend of the poor, sick, and elderly continue to sign up and the healthy do not, whatever low premiums there are will not exist in a year.

Denial is not an attractive quality in the American people and continuing to prop up this unsustainable program is only a dream for those who cannot come to terms with its demise.

Jan 30, 2014 2:05PM
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Google "PwC's Health Research Institute" and you'll see that it is a commercial think-tank that makes part of its income producing research papers for paying customers.  One always has to question the objectivity and credibility of a report under such an arrangement.

The article doesn't say who paid for this study and report . . . that would be nice to know.  Since the PwC HRI website indicates they provide many services to the Government, I wouldn't be surprised to discover it was HHS.
Jan 30, 2014 2:05PM
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He's praising the reason no "young people are signing up for Obamacare... They don't have the need to since they can stay on their parents plan until they are 26 freaking years old!


They built in their own failure mechanism.  You need to wonder if this was intentional on his part to stick it to the "whitetinos"..

Jan 30, 2014 2:14PM
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if the healthy and young don't enroll, you can kiss those "comparable" prices goodbye.
Jan 30, 2014 2:21PM
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The people who thinks Obamacare is a good thing should first make an appointment with a psychologist.
Jan 30, 2014 2:02PM
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"The phrase "sticker shock" has made headlines in stories about individual Obamacare enrollees, but premium prices for health insurance plans sold on Obamacare exchanges nationally are actually about the same -- and in some cases cheaper -- than premiums for comparable employer-offered plans, a new analysis reveals."

Oh really NBC, what a bunch of bullsh*t.
Jan 30, 2014 2:14PM
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This article is laughable.  "Comparable???"  And what happens when Aetna and the other insurance companies pull out of the exchanges after 2014???  This administration and their minions in the press are convinced the people in the country are too stupid or too lazy to figure out the lies they repeatedly spew. 
Jan 30, 2014 2:14PM
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"many of the exchange plans have narrower provider networks, with more limited choices of doctors and hospitals," than employer-offered plans. Such so-called "narrow networks" have held down the costs of exchange plans.

This fact is enough to render the article irrelevant.  
Jan 30, 2014 2:20PM
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The premiums might be similar but the deductibles are higher and the co-pays are lower. 

Premium costs are not the only element of cost comparisons. 

Jan 30, 2014 2:14PM
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In California the number of subsidized enrollees thru December 31 was only 15% of the total.    Unless that ration changes there's no way the 2015 premiums can be priced at the 2014 rate.  The math virtually guarantees that even with the taxpayer subsidies. 


Jan 30, 2014 2:16PM
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Sorry, I meant to say the non-subsidized enrollees amount to 15% of the total.  That leaves 85% of the enrollees receiving subsidies. 
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