Health and Science

Benchmark Obamacare plans often cost less than job-based health insurance

Certain Obamacare plans may be cheaper than job-based coverage

Insuring people through Obamacare — which was crafted in part to cover people who can't get health insurance through their jobs — may be costing less money than if they had employer-based coverage, a new study suggests.

The study, by the Urban Institute, comes as premium rates for 2017 Obamacare plans are being finalized. Those premiums are expected to rise more sharply, on average, than in recent years.

But the report found that certain key Obamacare plans, on average, cost 10 percent less in premiums than average employer-based coverage, when adjusting for how much the plans cover for medical services, as well as for adjustments for health-care usage and age distribution.

The average monthly Obamacare premium for the types of plans examined was $464 per month for an individual, nationally. That compared to $515 per month for an average job-based premium for an individual, according to the report, entitled "Are Nongroup Marketplace Premiums Really High? Not in Comparison with Employer Insurance."

"We find that in most states and in most metropolitan areas, [Obamacare] premiums are lower than for those for employer-sponsored plans," the report's authors wrote.

In 38 states and the District of Columbia, the average premium for those key Obamacare plans was lower than the average job-based plan premium, the report found. The exceptions were Alaska, Arkansas, Delaware, Georgia, Louisiana, Missouri, Nebraska, North Carolina, South Dakota, Vermont, West Virginia and Wyoming.

And in the 32 large metro areas that were examined, only four — San Francisco, Atlanta, New Orleans and Charlotte, North Carolina — had higher premiums for those Obamacare plans than the average job-based coverage, after adjusting for actuarial value, service utilization and age.

"You hear all this rhetoric about these [Obamacare] premiums ... [being] higher and they're growing faster," said Linda Blumberg, senior fellow at the Health Policy Center of the Urban Institute.

But, Blumberg added: "It's not that these markets are crashing and burning — far from it, in most places. We're not talking about the kind of disaster area that the rhetoric would have you believe."

"In the majority of cases," Obamacare premiums are "looking very reasonable," particularly when compared to the cost of job-based coverage, she said.

Most Americans, 150 million or so, get health coverage through an employer. Another 11 million or so get covered by Obamacare plans sold on government-run exchanges, and several million more buy Obamacare plans outside of the exchanges.

The Urban Institute's report looked at the total premiums paid for both job-based plans and Obamacare plans.

In the case of job-based coverage, that includes what the employer pays toward the premium and the employee's share. For Obamacare plans, that includes what a customer personally pays, plus any subsidy they receive from the government in the form of tax credits.

The report focused on premiums for the second-lowest-cost "silver" Obamacare plans against employer-sponsored plan premiums in the same geographic area. Silver plans, the most popular type of Obamacare coverage, cover about 70 percent of their customers' health services' costs, with customers owing the rest personally.

And the price of silver plans in an area is used to calculate the value of subsidies that qualified Obamacare customers receive. Those subsidies are available to people with low or moderate incomes.