Health insurance 101—how it works
When you purchase health insurance, you become part of a pool.
Simply put, a health insurance pool is a group of people that share the risk and works to protect everyone in the pool. Here's an example:
Kate and Jack
Jack's father, David
If David did not have health insurance, the surgery would have cost him $24,586 out of pocket.*
*This example is based on a member with CompChoice 250 plan, with a $250 deductible and $1,500 co-insurance maximum.
Sharing risk benefits everybody
The monthly premiums paid by members are put into the pool to pay for the medical expenses of all members. This way, when a member has health care expenses, the cost is shared between healthy and unhealthy people in the pool.
If the risk was not spread over many people, David's health insurance costs would be extremely high—probably so high he couldn't afford it. Today, the healthier Kate and Jack pay more in premiums than their medical expenses, but they have the assurance of knowing that if their health takes a turn for the worse, they would be covered.
How premiums are determined
By examining the past medical expenses of our members, BCBSND estimates what members are likely to use in the future. Based on this estimate—along with members' ages and what's covered by their health insurance—BCBSND establishes a rate that is divided among everyone in the pool.