Private Health Plans: Comparison of Employer-Sponsored Plans to Healthcare.gov Marketplace Plans

What GAO Found

Most Americans get their health coverage from private health plans. In 2023, about 165 million individuals got their health coverage from an employer plan and 16.3 million got their coverage from plans purchased through Marketplaces established through the 2010 Patient Protection and Affordable Care Act.

One of the costs for private health plans is the premium that needs to be paid for enrollment. GAO compared monthly premiums per covered individual for employer-sponsored and Marketplace plans using Agency for Healthcare Research and Quality survey data and Centers for Medicare & Medicaid Services' (CMS) Marketplace data, respectively. GAO found that for the 33 states included in its review (those that used the Healthcare.gov platform), in 2022, the estimated average monthly premiums for employer-sponsored plans were lower than the average premiums for Marketplace plans. However, stakeholders noted that differences in covered populations, such as in health status, complicate comparability of premiums between these two types of plans. Additionally, after employer contributions to employee premiums and federal premium tax credits for Marketplace plans, the average estimated monthly enrollee contributions to premiums per covered individual for employer-sponsored plans were higher than the average enrollee contributions to premiums for Marketplace plans. Taxes complicate comparability because enrollee contributions to employer-sponsored plans do not reflect their cost after tax savings.

Average Monthly Premiums and Enrollee Contributions Per Covered Individual for Employer-Sponsored Plans (estimated) and Marketplace Plans in the 33 States That Used the Healthcare.gov Platform, 2022

Note: Enrollee contributions to premiums for employer-sponsored health plans are made with pre-tax dollars, which results in tax savings for enrollees. Enrollee contributions to premiums for Marketplace plans are generally made with after-tax dollars.

Premiums for both employer-sponsored and Marketplace plans varied across the 33 states in 2022. In addition, for employer-sponsored plans, they varied by industry and for Marketplace plans they varied by tier of coverage.

GAO found that differences in plan designs complicated comparisons of cost sharing across plans. For example, in 2022, estimated average deductibles for employer-sponsored plans were lower than for Marketplace plans, but GAO estimated that a higher percentage of Marketplace plan enrollees were in plans with no deductible.

Why GAO Did This Study

Private health plan spending is projected to exceed $1.5 trillion in 2024. This has financial implications for enrollees, who pay for either all or part of their premiums; for employers who typically contribute to employees' premiums costs; and for the federal government, which provides tax incentives and other financial support for Marketplace and employer-sponsored plans.

GAO was asked to compare employer-sponsored plans to Marketplace plans. In this report, GAO describes, among other objectives, how average employer-sponsored plan premiums compared to Marketplace plans; and how average cost sharing to consumers in employer-sponsored plans compared to that of Marketplace plans.

GAO reviewed Agency for Healthcare Research and Quality Medical Expenditure Panel Survey Insurance Component data on employer-sponsored plans and CMS Marketplace individual market plan data to estimate enrollment-weighted average premiums and cost sharing in 2022 in 33 states. These states were selected because they used the Healthcare.gov platform in 2022 (the most recent year of data available at the time of the review); thus, complete and comparable data were available for Marketplace plans across those states. Additionally, GAO interviewed officials from the Agency for Healthcare Research and Quality, CMS, the Department of the Treasury, and representatives from six stakeholder groups, such as those representing insurers and policy researchers, selected to reflect a range of expertise on the topics under review.

For more information, contact John E. Dicken at (202) 512-7114 or [email protected].

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