Tuesday, October 8, 2013

Getting a Feel for Obamacare Premium Rates

I, like many people, went on healthcare.gov on October 1 and found that it doesn't work.  However, I had much better luck at Blue Cross Blue Shield of Michigan.  Today, I'll show you what I found out about my own situation at Blue Cross Blue Shield of Michigan's website.

Hit the "Get a Quote" button at the lower left and then select 2014.  The following rate information assume no eligibility for a subsidy.  However, if you estimate your 2014 income you can compute the discount you'll receive on the rate.  The rates shown are full price with no discount based on income.

PPACA (aka Obamacare) severely limits what insurance companies can consider when setting rates.  They can consider geography (e.g. if you live in an expensive city vs. a less expensive rural area), age, and whether you smoke.  BCBSM asks for gender, but when I run the numbers changing to M to F the rates appear to be the same.

Here's a summary of my results:


Here's a key:

Ded = Deductible
CoIns = Coinsurance
OofP Max + Out of Pocket Maximum
Prem = Monthly Premium, including state and federal taxes and fees

I played around a little bit with the assumptions.  As I said earlier, changing my gender does not change my premium.  However, a county line runs through my zip code.  If I lived 2 miles east in Tuscola County, for the most part my rates would be higher but some plans are actually cheaper.  Also, plan availability varies depending on where you live in Michigan.

One other thing.  A family plan for two adults seems to cost the same as two separate individual policies.  To get an idea of what a family plan for two costs if the couple are the same age, just double the deductible, out of pocket maximum and premium.

I think where most people will have sticker shock is when they figure out that a $5950 deductible means they will pay almost $6000 before the policy pays for anything (with few exceptions).  If I understand the calculation correctly, the lowest cost Bronze Plan would cost about $2600 per year ($216 * 12).  The policyholder would pay 100% of costs, up to the deductible.  After the deductible is met, the policyholder pays 40%, up to the out of pocket maximum.

Example 1 (Minor Costs of $1000, Bronze Blue Cross Select Plan)


  • Premium = $216 / month * 12 months = $2592
  • Below Deductible, So Policyholder pays 100% = $1000
  • Total Paid = $3592


Example 2 (Short Hospital Stay of $10,000, Bronze Blue Cross Select Plan)


  • Premium = $2592
  • Deductible = $5950
  • Coinsurance = $4050 * 40% = $1602
  • Deductible + Coinsurance = $7552
  • However, we've exceeded the out of pocket maximum of $6350.
  • So Total Paid = Out of Pocket Maximum + Premium = $6350 + $2592 = $8942
  • Insurance company pays the rest ($3650 is their share).

For someone without subsidies, this is not cheap insurance.  The bulk of the cost falls on the policyholder.  However, in a catastrophic situation, the most the policyholder would be out is $8942, on the assumptions above.

Here's another thing to consider.  HMO networks are much narrower than PPO networks.  A PPO will give you access to more providers.  Also, with an HMO there is no coverage for non-emergency visits to providers outside the network (generally speaking).  In BCBSM's scheme, you pay a higher rate to see a doctor outside the network.  If you have a favorite doctor and you are worried about whether he or she will be in network, a PPO would allow you to see that doctor even out of network if you're willing to pay more.  That could prove important if the Obamacare policies become stigmatized like Medicaid with doctors refusing to participate in the networks.

I hope that helps some of you out there.  For more examples, check out my book The Small Business Guide to Obamacare: Solutions to the Looming Health Law (Without the Politics).

Here are my favorite of Today's Obamacare Headlines:

Rightwing Rants

Republicans should just let Obamacare fail of its own accord.

Obamacare epiphanies: someone has to pay for all this free stuff.

Glitches, glitches, everywhere.


Leftwing Cheerleading

Obamacare does not cause part time hiring.

Sen. Cruz is crazy.

Hard News

Sen. Cruz argues for swapping debt ceiling for Obamacare reforms.

Lawmakers signal willingness to compromise.