Many Americans Fail to Ask Basic Questions Before Signing Up for Health Insurance
Washington, D.C. – With the Affordable Care Act (ACA) open enrollment period starting in November, a national survey by the American Institutes for Research (AIR) finds that three out of four Americans are confident they know how to use health insurance, but 42 percent say they are not likely or only somewhat likely to review a plan’s details before signing up for coverage.
The AIR survey found wide gaps in Americans’ health insurance literacy, with only 20 percent able to calculate correctly how much they owe for a routine doctor’s visit.
“Because many people believe they know more than they actually do about health insurance, they may not fully understand their options before committing to a particular health plan, or they may face the shock of high out-of-pocket expenses they didn’t expect,” said Kathryn A. Paez, Ph.D., R.N., an AIR principal researcher, and coauthor of the study with Coretta J. Mallery, Ph.D., an AIR senior research scientist.
The nationally representative survey of 828 people aged 22-64 examined four key dimensions of health insurance literacy: knowledge of terms and concepts, including types of services and enrollee rights; information-seeking skills, such as evaluating the credibility of sources and the ability to ask questions; document literacy, including the ability to complete forms and understand benefit descriptions; and reasoning skills, which range from calculating out-of-pocket costs to assessing personal health risk and the need for preventative care.
- Consumers had a weak grasp of different plan types. About half could identify general characteristics of a health maintenance organization (HMO) and 23 percent could identify the characteristics of a preferred provider organization (PPO).
- On average, participants correctly answered 60 percent of knowledge and skills items in the survey. While most could identify common insurance terms, such as “appeal” (80 percent) and “premium” (81 percent), far fewer could identify more complicated concepts, such as “step therapy” (37 percent) or “medically necessary” (60 percent).
- Three out of four of those surveyed said they were moderately or very confident that they have the knowledge needed to use health insurance effectively. However, only about one in five could accurately calculate how much they would pay for a visit to an in-network doctor when presented with a scenario that included a copayment, deductible and coinsurance, which makes the policyholder responsible for a portion of the expenses.
- When comparing insurance plans, 42 percent were not at all or only somewhat likely to check what a plan will and will not cover before getting health services.
- Seventy-nine percent were moderately or very likely to check which hospitals and physicians various plans cover while 21 percent said they were only somewhat or not at all likely to consider this when selecting coverage.
- Generally, younger people were less health insurance literate. For example, on average those aged 22 to 34 correctly answered 55 percent of the knowledge and skills items on the survey, compared with 63 percent of 55- to 64-year olds.
- Individuals who had not seen a physician in the past year on average got 49 percent of the knowledge and skills items correct, while those who saw a doctor several times a year scored 64 percent.
“Younger people, those who use health care less frequently, minorities, people with lower incomes and those with less education have less knowledge about health insurance because all of these groups are more likely to be uninsured,” said Paez. “And, they are the people most likely to use the health insurance marketplaces.”
Under the ACA, millions of Americans gained health coverage—many for the first time—through Medicaid or by purchasing private coverage in the federal or state health insurance marketplaces. During annual open enrollment—for 2015 coverage, Nov. 15, 2014 through Feb. 15, 2015—people can sign up for coverage or change their health plan for the coming year.
The AIR Issue Brief—A Little Knowledge Is a Risky Thing: Wide Gap in What People Think They Know About Health Insurance and What They Actually Know—is available online at www.air.org. It includes a checklist for choosing a health insurance plan.
Established in 1946, with headquarters in Washington, D.C., the American Institutes for Research (AIR) is a nonpartisan not-for-profit organization that conducts behavioral and social science research and delivers technical assistance both domestically and internationally in the areas of health, education and workforce productivity. For more information, visit www.air.org.