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For Cheaper Insurance, Head to Obamacare Exchanges

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Insurance premiums are on the rise for a combination of reasons. Photograph by Karen Bleier — AFP via Getty Images

It turns out that to save a little bit of cash when it comes to health insurance, the Obamacare exchanges are the place to look.

Individual plans sold outside of the Affordable Care Act marketplaces had bigger premium increases and higher administrative costs than those sold within the exchanges, according to a new Commonwealth Fund report. The report also found that more people are flocking to the exchanges to find their ideal insurance plan than previously. In 2016, 17% of individual health insurance plans were sold off the ACA exchanges compared to 28% in 2014. “Off-exchange” means plans bought directly from insurers or from traditional or web-based brokers.

Many worried that such a trend would burden Obamacare exchanges with the premium plan enrollees while companies outside of the marketplace would sell cheaper plans with less coverage, thus attracting a healthier customer base and shifting the sicker (and costlier) patients to the exchange plans. So far, that hasn’t happened. Bronze-level plans, the less expensive and lower coverage option, are equally popular on and off the exchanges. The higher-end plans are actually more popular outside of the exchanges.

The result is that prices for ACA marketplace plans rose less than those off them. Administrative costs were 2.5 percentage points higher in plans sold exclusively outside the exchanges, and premiums increased slightly more for off-exchange plans than on by $8 per member per month, according to the report.

“Collectively, the data in this report make a strong case for the viability of the Affordable Care Act marketplaces,” Sara Collins, vice president for Health Care Coverage and Access at the Commonwealth Fund, said in a statement. “Insurers inside the marketplaces appear to be competing well on price and continue to sell more of their business through them. And, the measures designed to encourage insurers to enroll healthier as well as sicker people in the marketplaces are working.”

Commonwealth looked at data from the “unified rate review template” for 2016 that insurers are required to file with Center for Medicaid and Medicare Services Center for Consumer Information and Insurance Oversight, showing how they set their premium rates for ACA-compliant plans. The data also includes projected premiums and enrollment for the coming year in each type of health plan on and off the exchanges.