Engage: Blog

Kathryn Paez | Oct 2014 | 0 COMMENT(S)

When it comes to health insurance, a little knowledge can be a risky thing, according to a new national study conducted by AIR that found a wide gap between what Americans think they know about health insurance and what they actually know.

For example, while about three out of four Americans are confident they know how to use health insurance, only about one in five could correctly calculate how much they owed for a routine doctor visit, according to findings from the nationally representative AIR 2013 Health Insurance Literacy Survey of 828 people aged 22-64.

Lacking health insurance-related knowledge and skills—or health insurance literacy—puts people at risk of choosing an insurance product that could fail to provide needed benefits or protect them financially. And, previous research has shown that consumers who struggle to understand how health insurance works and how to estimate out-of-pocket costs are at risk of going without needed care even if they are covered.

The new study findings suggest that many Americans will be unprepared to make informed decisions when choosing or changing health plans during the coming annual open enrollment in the state and federal health insurance marketplaces, which begins Nov. 15 and ends Feb. 15, 2015.

Generally, younger people, those who use fewer health care services, minorities, people with lower incomes and those with less education have more difficulties navigating health insurance, the study found.

“The findings that older people and those who use more services have higher levels of health insurance literacy suggest that people learn about health insurance by doing, so creating tools that simulate real-life examples of how to use insurance are likely to be most effective,” 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 researcher.

Information about the development and validation of AIR’s Health Insurance Literacy Measure is available in a recently published article in the Journal of Health Communication. And, the study’s findings are detailed in a new 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—available online here.  Other key findings include:

  • Overall, people got an average of 60 percent of health insurance knowledge and skills items correct. While most people could identify common insurance terms, such as an appeal (80%) and premium (81%), far fewer could identify more complicated insurance concepts, such as step therapy (37%)  or medically necessary (60%).
  • When comparing plans, most people (79%) were moderately or very likely to check which hospitals and physician are covered in each plan, but a sizeable minority (21%) was only somewhat or not at all likely to consider this basic plan characteristic.
  • More than two out of five people (42%) were not at all or only somewhat likely to check what their plan will and will not cover before getting health services. And, only slightly more than half of people were moderately or very likely to “look to member services to tell you what medical services your health plan covers.”
  • Generally younger people were less health-insurance literate—for example, people aged 22 to 34 got an average of 55 percent of knowledge and skills items correct compared with 63 percent for people aged 55 to 64. Likewise, people who use health care less frequently had more difficulties. People without a visit to a physician in the past year on average got 49 percent of the knowledge and skills items correct, while those who saw a doctor a few times a year scored 64 percent.

Coming tomorrow: A Consumer Checklist for Choosing a Health Insurance Plan