In one episode of Friends, Rachel, after breaking up with Ross (the paleontologist, played by David Schwimmer) started dating Russ (a periodontist, also Schwimmer). The two Schwimmer characters, who may as well be clones but for their different spheres of employment, are sizing each other up in an exchange in the coffee shop after which Monica, Ross’s sister, observes ”They’re as different as night and… later that night.”
Monica’s observation is also applicable in comparing employer-sponsored coverage with ACA exchange coverage. Consider this analysis by Avalere Health examining the data of enrollees in the ACA exchanges. Of note, they said the following:
Double digit premium increases are likely in many markets in 2014. Despite initial concerns about the age mix of exchange enrollees, the current age distribution appears to be close enough to plan projections to avoid driving major premium increases. However, secular increases in the cost of medical care and in utilization of services and new medical technology make it likely that exchange plans will need to increase their prices.
This is an interesting observation, particularly in light of the Robert Wood Johnson Foundation study that found that exchange plans had, on average, lower premiums, but higher cost sharing, than employer-sponsored plans.
So how does this tie back to Monica? Despite some sounds of the supposed death knell of employer-sponsored coverage, a mass exodus seems very unlikely under the current ACA system. We can trot out the usual suspects (play or pay tax, loss of ability to attract and retain employees, etc.), but those would probably not really be impediments if the ACA system was markedly better.
However, these studies show that it’s really not all that different. From a cost perspective, as Avalere notes, the same factors that drive the cost of employer-sponsored coverage will also drive the cost of exchange coverage. Sure there’s the “you aren’t tied to your job” benefit, but there are also more out of pocket costs.
In the end, from an employer’s perspective, ACA exchanges are just another way of delivering the same benefit. It’s another choice with its own set of pros and cons to be weighed and analyzed, as different as night and later that night.
The views of this post do not necessarily reflect the views of Bryan Cave LLP or anyone other than the authors.