Currently, employer-sponsored health insurance is the foundation of America's health insurance system. However, many experts predict a major shift in the market from employer-sponsored health insurance (a defined benefit) to individual health insurance and defined contribution health benefits. What will be the driving forces of this shift over the next few years? Cost and consumer choice.
A new study released Thursday by PricewaterhouseCooper's Health Research Institute (HRI) analyzed the cost of individual exchange premiums compared to employer-sponsored premiums.
The study found that in 2014 individual health insurance plans offered on the ACA’s exchanges are comparable to, or lower priced than, similar employer-sponsored plans. Additionally, most exchange shoppers have a wider variety of plans than the typical employer-sponsored offering.
HRI’s analysis was based on data of employer-sponsored premiums of 156 million people in 2013. The analysis compares the premiums paid by employers for single worker coverage to premiums paid for similar individual health insurance coverage in the state exchanges.
HRI found that the median 2014 individual exchange premium (for a plan with coverage similar to that of the average employer-sponsored plan) was $5,844 a year. By comparison, the average employer premium for a single worker was $6,119 a year, a difference of 4%. The exchange premiums do not include application of premium tax credits, which lowers the premium cost even more for eligible policy holders.