Obamacare Premiums Cost Less Than Employer Plans

Obamacare premiums cost less than employer-based insurance this year, according to a new report, but a major reason was narrower networks that offer fewer doctor choices in Obamacare plans.

A new analysis found 2016 Obamacare premiums for the second-cheapest plan, the silver plan, were lower in 39 states and the District of Columbia than the average premium for employer-sponsored plans. The news comes ahead of several states expecting major increases of 50 percent or more for some Obamacare plans in 2017.

The analysis from the left-leaning think tank Urban Institute estimated that this year the second-cheapest silver plan cost $294 across all 50 states and the District of Columbia. Meanwhile, the second-lowest employer premium cost an average of $464 a month.

The Urban Institute pegs the discrepancy on a number of factors, chief among them the network of providers offered by Obamacare insurers.

“Marketplace insurers also tend to offer narrower provider network plans than their employer-based counterparts, with more limited networks leading to significantly lower premiums in many cases,” the think tank said.

About half of Obamacare plans in 2016 offered an HMO or exclusive provider organization that limited doctor choices for consumers, according to a study from the Blue Cross Blue Shield Association, which represents local Blue Cross chapters.

Another contributor to lower premiums was that some Obamacare insurers underpriced their insurance plans at the start of 2014 when the marketplaces went online. Some experts believe the expected big premium increases for 2017 are due to a market correction to compensate for the underpricing.

The amount of the price difference between employer and Obamacare-sponsored insurance varies by state.

While 39 states had higher employer-based premiums compared to Obamacare, about 12 states experienced the reverse. Those states were Alaska, Arkansas, Delaware, Georgia, Louisiana, Missouri, Nebraska, North Carolina, South Dakota, Vermont, West Virginia and Wyoming.

Take Vermont, which doesn’t allow premiums to vary by page in the individual insurance market, which is for people who don’t get insurance through their job and includes a majority of Obamacare enrollees. However, the state’s large employer market doesn’t have that same restriction and can charge higher or lower premiums based partly on age.

“The premium rating differences between the Vermont group and nongroup markets are at one extreme of the distribution, making them less comparable to each other than are the other states,” the analysis said.

The study comes as Republican lawmakers slam the Obamacare price increases.

“Most Americans are seeing even higher proposed premium increases. Conceding to the massive premium increase, the administration then relies on tax subsidies,” said Rep. Jason Chaffetz, R-Utah, chairman of the House Oversight and Government Reform Committee, which held a hearing on high Obamacare premiums last week.

“However, regardless of the subsidies, Americans are feeling the full brunt of just how costly the Affordable Care Act is.”

The administration has reported that even with premium increases, the vast majority of consumers on healthcare.gov can get a plan for less than $75 a month because of government subsidies.

In addition, independent experts calculated that marketplace premiums are 12-20 percent lower than the Congressional Budget Office projected when the law was passed, according to an op-ed from Health and Human Services Secretary Sylvia Burwell.

“In most places and for most people, the marketplace is working well, and I expect it will continue to grow in the years ahead,” Burwell wrote in USA Today Sept. 9.

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