Why employers may consider public health care exchanges

New public health care insurance exchanges may provide more affordable coverage than plans employers currently use, according to a new report.

An analysis by PwC’s Health Research Institute showed that the median 2014 premium on 51 public exchanges nationally is $5,844 for a plan with coverage similar to that of the average employer-sponsored plan.

The average employer-based plan premium for a single worker is an estimated $6,119, or about 4% more than the median public exchange plan premium for similar coverage. The premiums cited in the research do not include subsidies. The employer premium calculation was based on Kaiser Family Foundation research from 2013, with an increase of 4% to account for premium growth from 2013 to 2014.

The average of the lowest-priced premiums on the exchanges was $4,885 – 20% less than the average premium for comparable employer-sponsored coverage.

Average exchange premiums are lower than the average estimated employer-sponsored coverage premiums for every level of coverage (bronze, silver, gold, platinum), according to PwC.

The report cautions that many of the exchange plans have narrower provider networks with more limited choices of doctors and hospitals. But most exchange shoppers have a wider variety of plans available to them than employer-based insurance offers, the report says.

In addition, the report acknowledges that premiums in the public exchanges could change significantly over time as insurers gain more experience with exchange customers. But if the average pricing in public exchanges remains lower than the average price employers are paying, employers may want to consider using the public exchanges to provide health insurance coverage for their workers in the future, according to PwC.

Employers that use the public exchanges may find that employees appreciate being given a wider range of options at different price points through the exchanges, the report said.

The size of businesses eligible for the public exchanges varies by state, but it’s currently capped at 100 employees for 2014. Starting in 2017, states will be able to expand access to public health exchanges to include large employers with 100 or more full-time employees.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.