Thursday, November 7, 2013

How Much Does a $10 Office Visit Cost?

In my last blog, Retirement and the Affordable Care Act, I stepped through my reasoning for buying the cheapest health insurance policy I could find (it lowers my total healthcare costs) and explained how important it is for retirees to be able to buy private health insurance (you never know when your employer might retire you.)

Let’s take a quick look at what I could buy if I spent more.

Blue Cross Blue Shield of North Carolina, the only carrier offering policies in my half of the state for 2014, offers policies other than the $5,500-deductible Bronze Value plan I chose. I might have chosen their Silver Zero plan, Gold 1000 plan or Platinum 500 plan, among several other options. The numbers represent the individual deductible amounts and family deductibles are twice the individual amount.

Here are the key data points for each policy for my family of four.
Silver Zero. With this plan, I’d have no deductible to meet. Then again, I’d have to pay 50% of every covered medical claim until we reached the $12,700 family deductible amount. That doesn’t happen until we’ve spent $25,400. I’d get a break on prescriptions, paying 50% of their cost. My cheaper Bronze 5000 Value plan requires me to pay the full cost of prescriptions until I reach my overall deductible. Same with office visits. 

I’d get the larger doctors network with this plan, but as I mentioned in my previous blog, our doctors are mostly all available in the limited network.

So, I’d pay more for drugs and doctors in years with low total family claims with Bronze 5500, but I’d pay $8,628 more in annual premiums with Silver Zero. You can pay for a lot of doctors visits with $8,628 a year.

Our family out-of-pocket maximum would actually increase with the more expensive Silver plan.

Here’s a comparison of policies excluding the premium cost.
Gold 1000. I’d get small copayments for drugs and office visits and just 20% coinsurance. I’d also get the larger doctor network.

The family out-of-pocket maximum drops from $11,000 to $8,000 — if you ignore premiums.

Platinum 500. What would going platinum get me? I mean, besides an additional $14,592 a year in premiums? A $500 deductible, $10 office visits and $4 generic drugs.

The family out-of-pocket maximum drops all the way to $3,000, if you ignore premiums.

Gold and Platinum coverage are the kinds of policies people think they like. Ten dollars for a prescription, $15 for a doctor visit, $30 for a specialist. A huge list of in-network doctors. How do you beat a deal like that?

You beat it with lower premiums. Moving up another notch to Gold 1000 increases my premiums by $11,184 a year. (I love the way insurers only quote monthly rates. An extra $932 a month sounds a lot more attractive than an extra $11,184 a year, doesn't it?) 

Bankruptcy Protection

The most important number is the cost of annual premiums plus the out-of-pocket maximum. That’s your bankruptcy protection, or the most you would have to pay in any given year. As the bottom line of the table shows, that protection doesn’t increase by buying more expensive insurance in most cases. It decreases. You will pay more in a year with catastrophic medical expenses with more expensive policies.

Finally, here’s a graph of costs including premiums. You will notice what looked to be the least expensive policies are the most expensive when you consider all costs.
While my total costs for the Bronze Value 5500 plan will range from $16,296 per year to $27,296, depending on my medical costs, Platinum 500 is basically an “all-you-can-eat for $33,880 a year” deal. 

I hope you're hungry.

I’m liking my Bronze Value 5500 policy more and more.

These examples are specific to my family of four in North Carolina. Your mileage, as they say, may differ depending on specifics. In particular, NC hasn’t embraced ACA, so we have no real competition to lower rates here. Also, the premiums you see are for a family of four adults.

The basic principles will probably be consistent anywhere, though.

So, how much does a $10 office visit cost?

In our case, $14,592 a year.


  1. Given the history of Blue Cross in Missouri (went from non-profit to profit without properly disposing of assets ... had to be sued by our AG ... and the lawsuit proceeds funded one of the largest non-profit health foundations in the nation) ... one can only wonder about the real cause of your high premiums. On another topic, did you see the Time Magazine Issue on the cost of health care in America? It should be required reading for all of us as we listen to the complete nonsense spouted by all sides of the ACA debate.

  2. Thanks so much for your article. I had come to the same conclusion, but it was great to read your detailed analysis. In my case, the bronze plan (same PPO network) will cost me $1200 less a year in premiums than the equivalent silver, and the max OOP is approximately the same. For my husband, the savings are closer to $1500. You can pay for a lot of doctor's visits from the premium difference - even if the silver doctor visit copay were $0 instead of $30/$35.

    Also, in our case, the bronze plans are HSA eligible, the silver are not. This would be a major tax deduction for us, probably saving us around $1000 each in federal income taxes a year.

  3. Great article. I have come to the same conclusion as well. There seems to be a range of spending that if you stay within, a more generous plan might be less expensive but only if you stay below the upper limit. The thing that changed is knowing what your maximum out of pocket will be and it is capped.

    Your comment about being rejected hit home also. Strange thing now the same insurer that rejected me now has 2014 plan that is cheaper than the one they rejected me for and now they can't reject me ????? makes no sense, especially since I have no conditions and rarely us medical services. The whole system is a scam.