How affordable are Affordable Care Act premiums?

6:13 AM, Sep 24, 2013   |    comments
Dean Dodson, an uninsured computer repairman in Baltimore, was elated when he learned the cost of his health insurance under Obamacare. / CBS News
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(CBS News) BALTIMORE -- One week from Tuesday, a major portion of the president's health care reform law will go into effect and change the way millions of Americans get their health care. On Oct. 1, they can start signing up to buy insurance on the new state exchanges.

Obamacare is officially the Affordable Care Act, but how affordable are the premiums?

Dean Dodson, an uninsured computer repairman in Baltimore, was excited to learn the cost of his health insurance under Obamacare.

"Oh man, I'm elated, it's like they took something off my shoulders, you know?" he says.

Dodson estimates he will pay around $285 a month, and at that price, he says, he can't wait to sign up.

"I can afford that -- I mean, that's wonderful, man," he says, with relief in his voice. "I mean, I'm 59 years old. Sooner or later, something is going to happen to me."

In Maryland, Dodson will get to choose from among six different insurance companies -- typical for most states nationwide. Most companies also offer multiple policies, ranked in price from bronze, being the cheapest, up through silver, gold and platinum, the most expensive.

Bronze-level plans have high out-of-pocket deductible costs but very low premiums. At the bronze level, Dodson could pay as low as $94 a month, but his deductible would be $6,000.

He thinks the silver level is better. That deductible goes down to $1,300, and while he pays $285 a month, it's still much lower than he expected.

"I thought it was going to be a little more expensive than what we're talking about now," he says. "I really did."

But the biggest reason for Dodson's low premium is the system of federal subsidies. Dodson's modest income of $36,000 dollars a year qualifies him for a $179 federal tax credit -- a tax credit that brings down his policy from its true cost at $464 to what he pays -- $285.

The other good news for Maryland residents is that most insurance companies there will offer access to the state's best doctors and hospitals, including Johns Hopkins. That won't be true in some states where the cheapest plans will offer much smaller networks of providers.

Seventeen states have publicly reported the policies and prices being offered on the exchanges. The nonpartisan Kaiser Family Foundation looked at all those rates and concluded almost all of the premiums will be lower than what was projected by the Congressional Budget Office.

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