Obamacare Sticker Shock Found in Deductibles, Not Premiums

The Fiscal Times

Despite concerns that Obamacare would cause the price of insurance premiums to skyrocket, a new study found that they are either lower or comparable for similar employer-based policies. However, consumers may still experience sticker shock from Obamacare’s pricey deductibles.

According to a report released by PwC’s Health Research Institute, insurance premiums on the new health exchanges are cheaper than those paid by the majority of Americans who have employer-based coverage—partly because of high deductibles.

Related: Majority Still Having Problems With Obamacare Website

The report found that the average cost of premiums sold on the Obamacare exchanges is about $5,844 annually —or 4 percent less than the average cost of $6,119 for an employer-provided plan with comparable benefits.

"We were a little bit surprised" when PwC crunched the numbers and found "the exchanges are competitive, and even cheaper in some instances," Ceci Connolly, managing director of PwC's Health Research Institute, told CNBC. She Added that PwC clients "have been very intrigued by" the results.

Still, PwC’s study doesn’t account for other costs to consumers—like deductibles, which are likely to be more expensive under the new plans. A study by HealthPocket Inc. in December found that the average individual deductible for Obamacare’s bronze plan was $5,081 a year—42 percent higher than the average deductible of $3,589 for an individually purchased plan.

“Picking one dimension as PwC and others do gives a distorted picture of what the consumer is likely to experience,” Joe Antos, health policy analyst at the conservative American Enterprise Institute said. He added that the PwC study also doesn’t mention other changes that affect consumers like insurers narrowing provider access. 

Still, PwC researchers say if the price trend continues, employers may shift their employees onto the Obamacare exchanges.

The study found that the price of premiums is lower for consumers who select the lowest-priced Obamacare plans. The average cost for a bronze plan was about $4,885 or 20 percent less than an employer-based plan. The study did not factor in the subsidies offered by employers, or the tax credits offered on the Obamacare exchanges.

"Across the board, at every level, average exchange premiums are lower than this year's average premiums for employer-sponsored coverage," the report said, adding that the exchanges also offer a wider selection of plans to choose from than those offered by employers.

However, a number of top hospitals and doctors are not accepting insurance provided by the exchanges because of low rates and more bureaucratic red tape.

Related: Confusion Over Deadlines Jeopardize Obamacare

Obamacare offers consumers four different levels of coverage. There’s the bronze plan, which pays for 60 percent of medical costs and has the lowest premiums, the silver plan, which pays 70 percent of costs, the gold plan, which pays 80 percent and the most robust plan, the platinum, which pays 90 percent of costs and has the highest premiums.

"Employers today are frustrated by the cost and hassle of providing health insurance, so they are looking for an affordable alternative to keep their employees healthy,” said Connolly. 

Related: More Companies Dump Employee Insurance for Obamacare 

Companies like Target, Trader Joes and Home Depot have already dropped their coverage for part-time workers and are encouraging them to sign up for health insurance on the new exchanges instead in order to cut costs.

“This may be an option for employers in the not-too-distant future," Connolly said. "This data suggests this will be a competitive market."

Others say it’s too early to tell how it will affect employers. “The claim that premiums this year are cheaper is completely irrelevant,” Antos said.  “What matters is how this develops over the next few years and what happens that might destabilize the ACA rules.” 

So far, more than 3 million people have signed up for Obamacare, though a recent CNN poll of insurers estimates that about 20 percent of those have not paid their first month’s premiums—meaning the true number of people receiving coverage under the new law is still unknown. 

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