Contrary to New Report, Employer Premiums Are Likely Lower Than ACA Rates

September 23, 2016

Although a new Urban Institute report claims to show that ACA exchange plans are less expensive than employer plans, the report does not account for several key factors that would likely reverse the results.  The report, after adjusting for differences in actuarial value, utilization, and the age of plan participants, estimated that, on average, exchange plans cost 10 percent less than employer-sponsored insurance premiums in 2016.  However, the report also notes that exchange plans offer significantly narrower provider networks than employer plans, a factor that was not accounted for in the study.  Other health analysts also note the Urban Institute study did not account for the significant losses insurance carriers participating in the exchanges have suffered, and did not appear to account for the impact of cost-sharing subsidies on exchange premiums.  Moreover, with exchange premiums estimated to increase by an average 11 percent for silver level plans in 2017, it is highly likely exchange premiums will be significantly costlier than employer plans when all of the factors that were left out of the study are accounted for.