New Data Show Nongroup Plans Paid Significantly Lower Prices to Providers Than Employer Plans In 2021

Health insurance
Health care pricing

Caroline Hanson, Ian McCarthy, Eamon Molloy, and Karen Stockley. “New Data Show Nongroup Plans Paid Significantly Lower Prices to Providers Than Employer Plans In 2021,” forthcoming at Health Affairs

Authors
Affiliations

Congressional Budget Office

Department of Economics, Emory University

Congressional Budget Office

Medicare Payment Advisory Commission

Published

September 2024

Doi

.

Abstract

Numerous studies show that employer plans pay providers significantly more than Medicare, but less is known about prices in nongroup plans, where narrow networks and low-cost insurers are more prevalent. We estimate prices for three market segments—on-marketplace nongroup, off-marketplace nongroup, and small group—and for three types of services—inpatient hospital, outpatient hospital, and professional—relative to a Medicare benchmark. We use 2021 claims data covering virtually all enrollment in Affordable Care Act risk-adjusted plans. In aggregate, marketplace prices are 152% of Medicare prices, while the prices paid in small employer plans are 179% of Medicare. Comparing across market segments, relative to small group, marketplace professional prices are 6.9% lower, inpatient prices are 13.3% lower, and outpatient prices are 26.3% lower. Off-marketplace prices fall between marketplace and small group prices. The finding that nongroup prices are significantly lower than prices paid by employer plans – more so than indicated by prior research – is important for understanding federal subsidies and affordability for nongroup coverage and evaluating policies such as a nongroup public option with prices capped at a percentage of Medicare.

Citation

 Add to Zotero

@article{hanson-etal2024,
    Author = {Caroline Hanson and Ian McCarthy and Eamon Molloy and Karen Stockley},
    Doi = {..},
    Journal = {Health Affairs},
    Title = {New Data Show Nongroup Plans Paid Significantly Lower Prices to Providers Than Employer Plans In 2021},
    Year = {2024}}