Off-Exchange Plans 39 Percent to 45 Percent More Expensive than Exchange Plans

From researchers at HealthPocket:

yuHealthPocket compared the lowest cost bronze, silver, and gold plans for four of the most notable off-exchange insurance companies to the lowest cost bronze, silver, and gold exchange plans.

The premium comparisons assumed a 40 year-old nonsmoker purchasing a health plan with an effective date of July 1, 2014. The four major off-exchange insurance companies used were United Healthcare, Aetna, Cigna, and Assurant.

Plans sold off-exchange must offer the same essential health benefits as plans sold on the exchanges, but the primary difference between buying plans on- or off-exchange is that only on-exchange plans are eligible for government subsidies.

On average the least expensive bronze plans offered by the four off-exchange insurers were 45% more expensive than the least expensive bronze plans offered on the exchanges.

On average the least expensive silver plans offered by the four off-exchange insurers were 39% more expensive than the least expensive silver plans offered on the exchanges.

The cheapest United Healthcare gold plan was 41% more expensive on average than the cheapest exchange gold plan, while the cheapest Assurant gold plan was 39% more expensive.

What explains these huge differences? Note that these premiums are observed before tax credits are applied to the exchange premiums. Tax credits would make the differences even greater, because off-exchange plans are not eligible for those subsidies. The biggest factor driving these premium differences must be the provider networks available in the off-exchange plans versus the exchange plans. This blog has long argued that ObamaCare’s exchange plans offer extremely limited access to physicians and hospitals. HealthPocket’s research corroborates our understanding that only high-income people, who are not eligible for tax credits, are likely to get comprehensive health insurance under ObamaCare.

Comments (12)

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  1. Caddy says:

    Great info here. I’m an avid follower of this blog, rarely comment. But, I just turned 22, today actually, and this is just another example of a looming “death spiral”. I’m a healthy young male and have opted to simply pay cash for doctor visits. Insurance costs are now way out of my budget and my PCP works with me on this.

    • H. Lars says:

      Right there with you, Caddy.

      How long to you think it will take before the exchange and non-exchange systems will realize that the premiums are absurdly high and the young healthy generation is simply not going to fork over the $ to take part in them?

  2. bob hertz says:

    Just a guess here, but could it be that the off-exchange companies do not expect to get the same billions in reinsurance and premium stabilization aid as the on-exchange companies??

    • Buddy says:

      I reckon there are no risk corridors for companies off the exchanges.

      • John R. Graham says:

        The best comments are the ones that add new information that I wish I’d figured out myself.

        Of course, this must be a factor in the off-exchange premiums. Thank you for contributing it.

  3. rex says:

    I’m confused. In the specialty drug turf war article, you argue for limited networks. Now you are arguing against them.

    • Thomas says:

      In ObamaCare insurance plans, limited networks means higher prices, limited choice, and limited access for quality health care.

      • John R. Graham says:

        Thank you. The issue in specialty pharmacy is not narrow versus broad network, but Any Willing Provider (AWP) whereby the government would prevent health plans from negotiating any networks at all (effectively).

  4. SPM says:

    It seems like ObamaCare will certainly result in more limited networks. This can be seen even now as many doctors are going to refuse to be a part of the exchanges. Indeed, many patients are already experiencing network lists with many doctors listed on their who no longer accept patients on the exchanges.

    • James M. says:

      Perhaps there is the incentive to buy a plan off the exchanges. Yes you’ll pay more, but you also may actually find a doctor willing to see you.

  5. Matthew says:

    I wonder though, are plans off the exchange more comprehensive health plans than offered on the exchanges. It is possible that these plans could be in a more broad network than what can be found on the marketplace?

  6. Linda Gorman says:

    How narrow are the exchange networks? In Colorado, one exchange plan consists of a single downtown always strapped for cash hospital and its 8 satellite clinics.

    This is not insurance. It is prepaid care, and not particularly convenient care at that.