Employer Premiums Higher Than ACA Rates, Report Says

Premiums in the individual health care market, on average, are lower than average employer-sponsored insurance premiums in 2016, according to a new analysis by the Urban Institute. The report offers perspective on the possibility of double-digit premium increases on Affordable Care Act exchanges next year.

The analysis found that nationally, the average second-lowest silver plan premium on an Obamacare exchange is 10 percent lower than the average employer-sponsored premium. The researchers made adjustments for actuarial value, or the percent of costs covered by the insurer, as well as utilization and age distribution.

“The persistent, uncomfortable truth is that health care is an expensive commodity, regardless of the market in which one purchases it,” the authors concluded.

The type of Obamacare plan used for the analysis is the same one used to calculate federal subsidies based on income. These subsidies largely absorb the brunt of individual-market premiums for eligible enrollees. While the Obama administration has emphasized the benefit of the subsidies ahead of the 2017 enrollment period, double-digit increases in rate proposals have still been dominating headlines.

In the employer market, a large portion of premiums are paid by the employer, which also disguises the cost of insurance. The Urban Institute’s analysis found that in more than 75 percent of states and more than 80 percent of metropolitan areas examined, individual-market premiums are lower than employer premiums.

“The focus of [ACA premium] criticism is that the full, unsubsidized premiums available in the marketplace are high — a sign that the pool of non-group insured are sicker than expected and that the new markets simply do not work,” the authors wrote.

Insurers and several experts agree that part of the reason for premium increases now, and poor exchange performance in the market, is that premiums were set too low in 2014, which led to losses. As more information becomes available, insurers will be able to more accurately set prices.

The employer market, by contrast, is well understood, and insurers have a lot of experience participating in it. That alone makes it more stable than the Obamacare market.

The future of Obamacare exchanges may depend on whether Congress and the administration are able to make improvements and adjustments based on the lessons of the first few years of implementation. Since the law passed, political barriers have prevented any meaningful adjustments from being made. It remains to be seen whether the results of the November election will give lawmakers greater ability to tinker with President Obama’s signature health care law.

Briefings

Health Brief: Week in Review & What’s Ahead

The Senate GOP’s working group on health care is still discussing how to craft a bill to replace the Affordable Care Act, but lawmakers are also focused on a short-term fix to stabilize the individual insurance markets next year. The fix needs to come before June 21, insurers’ deadline for deciding whether to participate in the exchanges for 2018.

Health Brief: House May Need to Vote on AHCA Again

There is a chance that House Republicans will have to vote again on their health care bill, which was barely passed by the chamber earlier this month. Speaker Paul Ryan has not yet sent the bill to the Senate because parts of it may have to be redone, depending on how the Congressional Budget Office estimates its effects.

Health Brief: Week in Review & What’s Ahead

Senate Republican leaders formed a group to craft legislation that would replace the 2010 Affordable Care Act. The 13-man working group, which includes some of the most conservative members of the Senate at the exclusion of more moderate members, has faced criticism for not including women.

Load More