STUDY: Average Obamacare Plans Are CHEAPER THAN Employer-Sponsored Ones

[Bill USA]

The study was done by Price Waterhouse Coopers - no 'liberal', Obama-loving organization. Where did I hear about this study? PBS News Hour?...No! ..... PBS's Nightly Business Report !!!! NO, REALLY!



http://thinkprogress.org/health/2014/01/30/3226271/obamacare-premiums-employer-plans/

[font size="3"]
Premiums for most health plans sold through Obamacare’s state and federal marketplaces are lower than those for the average employer-sponsored plan, according to a new analysis by consulting firm PricewaterhouseCoopers (PwC).

“In 2014 health insurance plans offered on the ACA’s 51 new exchanges are on average, comparable to, or lower priced than, similar employer-based plans,” wrote PwC. “In addition, most exchange shoppers have a wider variety of plans than the typical employer-based offering.”



CREDIT: PricewaterhouseCoopers

Last year, the Congressional Budget Office (CBO) projected that Obamacare premiums would be 18 percent lower than originally expected. The PwC analysis puts that figure in concrete terms, finding that the median Silver, Gold, and Platinum plans sold through the marketplaces are anywhere from $61 to $1377 cheaper than the average employer plan. The cheapest mid-level Silver plan — the most popular option for Americans buying new policies — could be almost $2500 cheaper than an employer sponsored plan.

The main reason that Obamacare plans are more affordable on a month-to-month basis is that the health law extends tax credits to Americans who have incomes between the poverty level and four times the poverty level. Early numbers indicate that over 80 percent of Americans buying plans qualify for some sort of subsidy, with the poorest Americans paying less than $100 per month in premiums.[/font]
(more)

[subterranean]

1. Is it an apples-to-apples comparison?

Are the exchange plans cheaper compared with the average employee contribution or the full premium of the employer plans? The article was not clear about that.

Did they compare the premiums of plans with similar benefits and networks? That isn't clear either. I've read that many of the exchange plans are cheaper in part because they have very limited provider networks.

My point is that it's hard to judge whether this is a fair comparison because premiums are not the only thing that should be taken into consideration.

[Bill USA]

2. I'm going out on a limb here and guessing that Price Watershouse Coopers have their 'street-cred'

riding on the validity of their conclusions. They are consultants to industry and they would find themselves quickly losing customers if they put out a study that didn't provide information that was helpful to their clients. To point out the obvious, they are not working for the Obama administration.


But not wanting to leave it there, guess what I did... I took a look at their report - (link provided in article) -a good way to get a clearer idea as to the validity of their comparisons.

Here's a couple excerpts:

Conclusion

"In 2014 health insurance plans offered on the ACA’s 51 new exchanges are on average, comparable to, or lower priced than, similar employer-based plans. In addition, most exchange shoppers have a wider variety of plans than the typical employer-based offering. The tradeoff may come in provider choice. It remains to be seen whether these patterns will continue over time. 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. However, if pricing dynamics in the public exchanges are sustained over time, this may provide an opportunity for employers to reexamine new approaches to providing health insurance coverage for their workers. "


"Employers may be surprised that exchange premiums in 2014 are comparable to employer premiums and in some states significantly lower than employer-based premiums. The comparison data may make public exchanges an attractive alternative for employers in the future. Employers contemplating future limits to their healthcare spending could face less resistance if employees are given a wider range of options at different price points via an exchange.

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Appendix: Methodology

The exchange premiums discussed in this report are based on premiums collected from
the most populous county in each state, which are usually the premium rates that apply
to the most populous metropolitan area in the state.12 The premiums at the various
metal levels—Bronze, Silver, Gold, and Platinum—were adjusted to reflect the national
distribution of ages of workers with single worker coverage (and without Medicare
or Medicaid coverage). Premiums for each metal level in each state were collected at
various benchmarks—lowest, highest, and median. For Silver plans, the second lowest
cost benchmark was also collected. For each metal level the various benchmarks were
averaged across states using weights based on the number of workers with employer
coverage (without Medicare and Medicaid coverage). The average premium is not
sensitive to the weighting scheme. For example, the average premium is roughly the
same if the state total population or the total number of workers is used as the weight
instead of workers with coverage.

The overall statistic chosen to summarize the difference in premiums between the
exchange and employer-sponsored plans—the average of the premiums for Gold and
Platinum plans—is based on the average actuarial value of employer plans, which is
about 85%, or the average of the actuarial value of Gold and Platinum plans.
The average premium for Platinum plans was based on the 37 states that offered
Platinum plans. Average Gold and Silver premiums were based on a greater number
of states. In addition, there are fewer Platinum plans, on average, than Silver and
Gold plans in the states that offer one or more Platinum plans. The potential bias
of having a different number of states was tested and found to be rather modest.
For example, the average Silver premium (based on the median for each state)
was $4,742, using all 51 states and DC, compared to $4,720 using only the 37
with Platinum plans, a difference of 0.4%. Similarly, the exclusion of the 14
states without Platinum plans changed the average Gold premiums by 0.3%.

[subterranean]

3. Thanks.

[Igel]

4. You have to read the big print here.

The price of the Obamacare plans included subsidies. So if Mrs. Q making $25k/year pays $80/month for her plan, that's her premium. If Mr. P, making $60k a year for his plan, pays $1250 a month, that's his premium.

Hard to tell if the employer-sponsored plans are directly comparable. Employer plans may cover more. At this point some are grandfathered in. There are different networks. Then there are strang things--my employer gives us a $250 preloaded flex-spend card to help make up for any donut holes in our plan or copays.

It looks like PW assumed a fairly flat employer-contribution percentage.