The Kaiser Family Foundation (KFF) published a report comparing expenditures under individual and employer-sponsored insurance (ESI) between 2004 and 2007.  KFF found that premiums were lower under individual plans than under ESI; however, individual policyholders paid a higher share of their health expenses out-of-pocket than those with ESI.  In addition, KFF found that average payouts were lower under individual coverage than under ESI and that individual policyholders were more likely to report being in “excellent” or “very good” health.

From the report:

Data from the insurance industry and reviews of premiums offered through on-line sellers show that premiums for nongroup health insurance are lower than premiums reported on national surveys for employer-sponsored health insurance (ESI).  This paper uses pooled data from the 2004 through 2007 Medical Expenditure Panel Survey to compare the insurance payments for and out-of-pocket payments by people with nongroup health insurance and people with ESI.  While premiums for non-group coverage are lower than ESI premiums, the average payments made by those policies on behalf of their enrollees are also lower than the average insurance payments for people with ESI.  Nongroup enrollees also pay a higher share of health expenses out-of-pocket compared to ESI.  The higher out-of-pocket shares paid by nongroup enrollees suggests that nongroup policies have higher cost sharing and/or cover fewer health expenditures than employer-sponsored insurance.  Nongroup enrollees also are more likely than ESI enrollees to report that their health status and mental health status are excellent, another factor helping to explain why nongroup premiums are lower than premiums for ESI.

Full report: http://www.kff.org/insurance/snapshot/chcm111006oth.cfm

The Kaiser Family Foundation.  (2010).  Comparison of expenditures in nongroup and employer-sponsored insurance: 2004-2007.