One of the primary reasons employers are canceling group health insurance in favor of individual health insurance and defined contribution healthcare is that individual health insurance costs less.
The following charts show a state-by-state cost-comparison of average individual health insurance premiums (offered through the federally-run Individual Health Insurance Marketplace in 2014), compared to average group health insurance premiums.
State by State Cost Comparison - Individual vs. Group Market
In all states using the federally-run Marketplace (healthcare.gov), individual health insurance policies are less expensive than group health insurance even before one takes into account premium tax credits.
As the charts below show, this holds true across Bronze, Silver, and Gold individual health plans.Bronze Level Plans
In a majority of states, Bronze level individual health premiums cost 40%-60% less than group health premiums.
Silver Level Plans
In a majority of the states, Silver level individual health premiums cost 20%-40% less than group health premiums.
Gold Level Plans
In a majority of the states, Gold level individual health premiums cost 20%-40% less than group health premiums. In no states do Gold level individual health premiums cost more than group health premiums.
For more data, see: The History & Future of Small Business Health Insurance Whitepaper.About the Data
Individual Marketplace Rates: Data was derived from CMS data available for the states using the Federal Health Insurance Marketplace. Rates were based on a 40-year old, non-smoker and are averages by state and metallic level. Sources: “QHP Landscape Individual Market Medical” and “QHP Landscape SHOP Market Medical” datasets (https://data.healthcare.gov/).
Group Health Insurance Rates: Data was derived from the Kaiser Family Foundation. Rates are state averages from 2012, single coverage. Source: Average Single Premium per Enrolled Employee For Employer-Based Health Insurance (http://kff.org/other/state-indicator/single-coverage).
Shift to Individual Health Plans and Defined Contribution
Due to the high cost of group health insurance and the better value of individual health insurance, small businesses have begun shifting employees to the Individual Market and are replacing existing employer-sponsored health insurance premium contributions with a Defined Contribution toward employees’ individual health insurance premiums.
Read more about the Shift to Defined Contribution Healthcare.