Off topic: Insurance Goes Insane

If you buy your own health care as I do, be sure to scrutinize any 2014 proposal from your health insurer. Don’t assume!

In summary, the proposal I received from Blue of California:

• Doubles the premium to nearly $19,000 per year for a plan that is so awful, it’s really only for emergency room visits and similar.
• Raises the deductibles substantially.
• Raises the annual out of pocket maximums substantially.
• Raises costs after deductible to 40% from $0.

Observe that it’s not just twice the price, it’s far lower benefits. Well, essentially zero benefits as a practical matter. If that’s affordable, I’d hate to see expensive health care. And this is for the purgatory plan one step above the don’t-even-think-about-getting-sick plan. I’m not talking here about the “silver” or “gold” or “platinum” plans. Hell, those are “heaven” plans I can’t even contemplate.

It gets uglier for small business. Like many small businesses I am an S-corporation, and health care premiums my S-Corp pays are taxable as income on my personal return. Which means the earnings needed to pay for it are far higher, meaning $19,000 really means at least $30,000 in earnings if not more (California and federal income taxes). Very affordable for successful attorneys I suppose. By the way, employees working for big companies are not taxed on health care premiums paid on their behalf, a gross inequity for the self employed.

If the goal is to break the family’s budget, the Affordable Care Act has succeeded brilliantly with me and my family. I make just enough to pay my bills—but too much to get the juicy tax credits. Funny thing is, I don’t see how plans like this one help anyone with routine medical care (the $4500 deductible is far too high for most Americans, and then there’s the 40% hit on top of that even after it’s met).

I’ve already inquired with a health insurance broker about an alternate plan: it seems that I might be able to get the premium down to “only” an 80% increase over last year. With the CoveredCA.com California exchange site, the cheapest Bronze plan for my family comes with a 85% hike in price and very high deductible. As if cutting off three fingers is better than cutting off four fingers.

As a “worst case” concern: that 40% after-deductible whack is limited to the $6350 per individual cap, or so one might assume. Otherwise, it would mean personal bankruptcy for any serious visit to the hospital or emergency room. But I wish it were spelled out: if I get hit by a bus, and exit the hospital alive (or dead) with a $200K hospital bill, am I liable for $6350 or $80,000? I’d assume it’s $6350, but I wish this were made explicit.

Red annotations below call out key points. The scan is of the flyer received from Blue of California.

Blue of California proposed 2014 medical plan