Consumers’ misunderstanding of health insurance

Abstract

Acknowledgements:We thank Tim Zautcke at Humana for assisting in the development of the surveys and for providing insight and expertise on insurance product design, and Jonathan Steinhart for providing statistical analysis. Thanks also to Judi Israel Rosen and the Colchester Consulting Group for creating the Behavioral Economics Academic Consortium, a collaborative group of nine academics from five universities. The Consortium partners with major corporations to advance the field of behavioral economics and address complex business and social issues. This collaborative effort creates a unique forum to test concepts and put the insights of academic research into action.2 Abstract: We report results from two surveys of representative samples of Americans with private health insurance. The first examines how well Americans understand, and believe they understand, traditional health insurance coverage. The second examines whether those insured under a simplified all-copay insurance plan will be more likely to engage in cost-reducing behaviors relative to those insured under a traditional plan with deductibles and coinsurance, and measures consumer preferences between the two plans. The surveys provide strong evidence that consumers do not understand traditional plans and would better understand a simplified plan, but weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.3

Preparedness of Americans for the Affordable Care Act

“…Although exchanges in Medicare Part D, for example, are considered a success in terms of achieving high enrollment rates (2, 3), recent analysis on plan choice and drug claims shows that the majority of enrollees ignore Medicare's readily available plan recommendations, and choose plans that fail to minimize their expected costs based on current drug needs, health status, and health risks (4,5). Moreover, consumers have been shown not to understand traditional health insurance plans (6). More generally, the populations most likely to be affected by the ACA-the young, less educated, and those with lower incomes-are also more likely to be financially illiterate (7).…”

Patient Experiences in Selecting a Medicare Part D Prescription Drug Plan

“…Choosing a Medicare Part D plan is difficult as health insurance is a complicated product and many Americans, not just older adults, have a limited understanding of many of the basic features of health plans (2). Studies of Part D plan choices have documented that decision-making quality declines as choice set size increases, particularly among older adults (3)(4)(5)(6).…”

Insuring Young Adults in the United States Through the Affordable Care Act

“…Young adults are likely to require more intense outreach and support if they were never eligible to receive health insurance through their parents' plan or those who chose to apply independently for other personal reasons or young adults who are now aging out of their parent's plans. Although the study points of Wong et al to the challenges encountered initially in using the Healthcare.gov Web site, these findings reflect the problematic experiences of many other populations who face the cumulative effects of technological snafus, low health literacy, and the complexity of selecting among competing health insurance plans [8]. A number of study participants perceived a lack of congruence between the ACA's "affordability" and its costly impact on their limited monthly incomes.…”