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.”
Last year, the White House projected that Obamacare premiums would be 18 percent lower than the Congressional Budget Office (CBO) 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.
In addition to the premium subsidies, the ACA extends so-called “cost-sharing” subsidies to those below 2.5 times the poverty level. These subsidies limit the annual out-of-pocket costs, such as deductibles and co-pays, that consumers have to pay and are only available to people who buy Silver plans.
PwC ends by noting that the Obamacare exchanges may actually be a better deal for their employees, and particularly poorer workers. “[I]f 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,” wrote the authors.