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.
This post comes from Dan Mangan at partner site CNBC.
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.
If 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."
But 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."
More from CNBC
|Tags:||employmenthealthhealth carehealth insuranceinsuranceinsurance claimsinsurance companiesinsurance rates|
"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!
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.
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.
Folks, you get what you pay for.
"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.
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.
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"..
Oh really NBC, what a bunch of bullsh*t.
Premium costs are not the only element of cost comparisons.
Copyright © 2014 Microsoft. All rights reserved.
ABOUT SMART SPENDING
LATEST BLOG POSTS
New rules mean that longevity annuities -- insurance against outliving your money -- are more attractive for retirement savers.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'