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Nationally, Individual and Group Market Costs Increasingly Similar

In 2014, Affordable Care Act (ACA) federal requirements went into effect that dramatically changed the regulatory framework for the individual market in most states. The ACA also applied separate regulatory changes to the group market, with the small group market having to undergo more adjustments than large group, but in general these reforms had less of a disruptive impact than in the individual market. This paper compares average claims expense across the individual and group markets by analyzing total incurred medical claims, both before and after the ACA’s requirements went into effect, from 2010 to 2016. Because we examined the years 2010 to 2016, this paper does not take into account recent changes that may affect costs and premiums in 2018 and beyond. We find that at the national level, individual market costs are coming into increasing alignment and achieving parity with costs in the group markets. Our findings suggest the ACA’s 2014 regulations brought the individual market into greater cost parity with the more mature group market. If costs in the individual market rise beyond the point of parity with the group market, then the increases may be more indicative of the structure and makeup of the market than with just underlying health care costs.

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