In general, lower provider prices lead to lower premiums and out-of-pocket expenses. Two factors suggest that Marketplace prices might be lower than prices in employer-sponsored insurance:

• First, Marketplace plans are more likely than employer-sponsored insurance to have narrow networks, which are associated with lower premiums, partly because negotiated prices are lower in plans with narrower networks. Many narrow-network plans are offered by insurers that formerly offered only Medicaid managed-care plans. These Medicaid managed-care insurers often contract with providers that accept prices that are lower than average.
• Second, non-group plan enrollees may be more sensitive to premiums than employer-sponsored insurance enrollees are, incentivizing insurers to negotiate lower prices.

Numerous differences between non-group and employment-based plans likely contribute to lower prices. These differences suggest that Marketplace enrollees are more price-sensitive, which could result from purchasing coverage individually rather than through an employer, from being lower-income and from a subsidy structure (compared with the exclusion of employer-sponsored insurance premiums from most taxes) that does not incentivize higher-premium coverage.

“This study provides the first set of nationally representative estimates of price differences among Marketplace non-group, off-Marketplace non-group and employer small-group plans,” the report concluded. “Marketplace plans achieved lower prices than off-Marketplace and small-group plans in 2021, but those plans still paid providers far more than Medicare paid.”