Exchange plans cheaper than employer-based coverage, PwC saysNews added by Benefits Pro on February 3, 2014
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By Kathryn Mayer

For PPACA naysayers who believe the law is actually inflating costs for health plans, there’s a new report that says otherwise.

Premiums for health plans offered on the exchanges under PPACA are comparable to — and often times lower than — similar employer-based coverage, an analysis by consulting firm PricewaterhouseCoopers has found.

Researchers analyzed the national average premium for workers ($6,119) and compared it to the median and lowest rates for comparable coverage on the exchanges.

The median 2014 premium for an exchange plan with coverage similar to that of the average employer-sponsored plan was $5,844, and the cost on the exchange for the cheapest equivalent plan was $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 states.

Under PPACA, consumers shopping on the exchanges can choose from four levels of plans — bronze, silver, gold and platinum, which pay 60 percent, 70 percent, 80 percent or 90 percent of health care costs, respectively. Paying for about 85 percent of health care costs, employer-based coverage typically falls between a gold and platinum plan under PPACA.

“The average median premium for gold plans is 8 percent lower than the national average employer premium. When examining the average of the lowest premiums for gold plans the gap is 27 percent," the firm said.

Even premiums for the highest-priced platinum plans were found to be lower, it said. The average lowest platinum premium is 13 percent below the average equivalent employer plan, while the average median premium is 1 percent lower.

The report also said that most exchange shoppers have a wider variety of plans than the typical employer-based offering, but that the tradeoff is that exchange-based plans have fewer health care providers.

Although the Obama administration has said premiums would decrease under the law, there have been reports of increasing prices under the exchanges, especially for those whose plans failed to meet the new, higher thresholds of Obamacare and were canceled by insurers.

Though the new PwC report finds that the exchanges are a good deal for consumers, it did not address deductibles and out-of-pocket costs, which have been part of the debate about increasing costs under the law.

Researchers also warned that the pricing under the exchanges could change substantially in the future.

“As insurers gain more experience with exchange consumers, and temporary risk sharing and risk corridors are removed, premiums could change substantially in the public exchanges,” the report said.

The firm's analysis is based on data of employer-sponsored premiums of 156 million people in 2013.

Originally published on BenefitsPro.com
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