For First Time, Employer-Provided Coverage Less Costly Than Individual Coverage

April 22, 2016

A new report from S&P Dow Jones Indices found the average per member per month cost for individual plans has rapidly increased since 2013 and is now around 10 percent higher than the cost of employer plans.  According to the report, the ACA's coverage mandates have drawn less healthy people into individual plans, while healthier people have not enrolled.  Employer coverage pools, conversely, have remained at what has historically been a predictable sampling of health and unhealthy individuals.  The report questions whether the ACA rules are strong enough to entice the majority of the healthy population to maintain or add coverage in the individual market.  If not, it queries whether average costs will then continue to rise for individual plans, rendering them even more unaffordable for individuals that receive little or no federal subsidies on the ACA exchanges.  Separately, a recent report from Kaiser Family Foundation estimates that UnitedHealthcare's decision to withdraw most of its ACA exchange offerings in 2017 will increase prices and reduce individuals’ choice unless other carriers step into those exchanges.  On Tuesday, UnitedHealth said it lost $475 million in 2015 on its exchange plans and was on target to lose $650 million in 2016.