And the exchange plans are, nonetheless, dramatically worse at a given price point than employer plans.
The primary reasons appear to be the giant tax subsidy for employer plans and the fact that insurers aggressively discriminate against people who don’t have employer plans.
It's not that they actively discriminate. It's because ACA plans are lumped into one big risk pool per market and ACA plans, by nature, attract more expensive people.
Yes. That is one way to think about the invisible high risk pools and reinsurance plans that some states have now for their ACA plans. Essentially they cap the per-individual risk in each pool and transfer the excess to the state as a whole. Several national plans like that have been proposed in Congress over the years but have failed mostly for partisan reasons.
I’m curious how you fit in to the various risk pools. COBRA appears to be the actual (pre subsidy) cost plus 2%.
The subsidy is the fact that employer contributions to health insurance are not taxed. Here’s an estimate that this costs about $280 billion/year. This is more than Elizabeth Warren’s tax!
Most people don’t realize how expensive their employer health plan is because they don’t even know the amount of their employer’s contribution.
If they ever lose/leave their job and try to get COBRA the sticker shock is intense. At that point it’s almost always better to get a Marketplace plan if you can, because the subsidized price will be much lower, if not even the unsubsidized price.
The exclusion from income of health insurance premium payments is the largest tax break on the books;
“According to a Joint Committee on Taxation analysis for 2007, the average savings for tax filers with incomes less than $30,000 was about $1,650 compared to about $4,580 for those with incomes over $200,000.” [2]
But I don’t agree that it should be eliminated. By comparison, ACA subsidies are about $6,300 per person on average. [1]
If you look at the exclusion in isolation it looks regressive. If you plot it alongside the ACA subsidies, in fact it’s not, it acts to smooth out the hyper-progressive ACA subsidy drop off.
The primary reasons appear to be the giant tax subsidy for employer plans and the fact that insurers aggressively discriminate against people who don’t have employer plans.