Affordable Care Act Premiums Lower than Employer Premiums

There has been significant criticism of US President Barack Obama and the Affordable Care Act due to what many consider skyrocketing insurance premiums.

This has become a critical aspect of the current election season, with certain candidates expressing interest in repealing it and others wishing to reform it. Criticism worsened with the recent withdrawal of Aetna from a majority of Affordable Care Act marketplaces, leaving many counties without options for this coming year’s open enrollment period.

However, a recent report from the Urban Institute reveals that unsubsidized non group premium increases are not as high as being portrayed, and are actually lower than most employer-sponsored plans.

Investigators who conducted the analysis compared unsubsidized non group Affordable Care Act marketplace premiums with unsubsidized average employer-sponsored insurance premiums in the same geographic area. Data were adjusted for factors such as actuarial value and age.

They discovered that, on a national level, non group premiums are 10% less than the average employer premiums for a single worker. A lower non group premium was found in 76% of states, according to the analysis.

States such as Connecticut, Montana, and North Dakota had a lower non group premium by an average of 1%, while Massachusetts’ average is 35% lower than average employer premiums.

The investigators also discovered that non group premiums exceeded average employer premiums by more than 5% in 8 states. Certain states with high-cost non group premiums are likely due to high-cost healthcare.

The state with the highest non group marketplace premium, Alaska, had a difference of 68% between the 2 premiums. Investigators said that a high cost of living, provider shortages, and high transportation costs associated with Alaska do not account for the large difference.

Only approximately 23,000 individuals enroll in non group marketplace insurance, which makes it difficult to spread the cost of individuals who utilize more healthcare. An additional reason is that Alaska only has 1 insurer offering plans for 2017; however, the state has created a reinsurance program in hopes of lowering premiums by increasing competition in the market.

In metropolitan areas, non group premiums varied from 3% to 43% lower than the average employer premium, according to the analysis. Non group premiums were at least 20% lower compared with employer premiums in 14 out of 32 metropolitan areas included.

Overall, 28 out of 32 metropolitan areas have lower non group premiums. Certain cities, such as San Francisco, Atlanta, New Orleans, and Charlotte, had higher non group premiums compared with employer premiums.

Specifically, in Charlotte, investigators pointed to a lack of competition as the cause of the large increase. Despite significant criticism, findings from the analysis indicate that 75% of states, and more than 80% of metropolitan areas, have lower non group premiums compared with employer premiums.

Therefore, the level and growth of non group premiums should not be seen as concrete evidence that Affordable Care Act marketplaces are weak and need to undergo heavy reform or repeal, since a majority of employer premiums are higher-cost, the analysis concluded.