The Kaiser Family Foundation created a simple 10-question quiz to identify your level of literacy with health insurance terms. Take the quiz and compare yourself to others who took the quiz. You may be surprised to learn you’re as smart as a sixth grader.
Health insurance literacy or HIL is a foreign concept to most people, but if understood and achieved at even basic levels can yield long-lasting effects on your health. The greater one’s understanding of health insurance the higher the likelihood to access care, get medical treatment and ultimately stay healthy. Nevertheless, health insurance literacy continues to remain at low levels in the United States.
Defined by the Health Insurance Literacy Expert Roundtable, health insurance literacy is the degree to which individuals have the knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own or family’s financial and health circumstances, and use the plan once enrolled. The degree of HIL that one possesses falls on a spectrum from none to high.
In 2003, the U.S. Department of Education conducted a National Assessment of Adult Literacy and found that one’s overall health (from poor to excellent) is a function of the level of health literacy, and that your level of HIL correlates with which insurance category you fall into: employer-sponsored, military, Medicare, Medicaid or uninsured. However, the average literacy scores of those with poor health compared to those with excellent health didn’t vary significantly. 53 percent of adults had Intermediate health literacy. About 22 percent had Basic and 14 percent had Below Basic health literacy.
In 2010, shortly after the Affordable Care Act’s (ACA) went into effect, the Kaiser Family Foundation conducted a survey to shed light on Americans’ understanding of basic health insurance terms and concepts. Over half (52 percent) answered at least 7 out of 10 answers correctly, with only 4 percent answered all 10 questions correctly. Using a grade-school scoring method, the remaining 44% would not have received a passing grade.
With several years of enrollment and experience in ACA health insurance exchanges, expectation is HIL would increase. Think again. In an analysis performed by the Institute for Healthcare Advancement in 2019, they found more than one-half (51%) of survey respondents had inadequate HIL as measured by knowledge of health insurance terms, and close to one-half (48%) had inadequate HIL as measured by confidence in health insurance use.
If people are not grasping even the basics of health insurance or feeling confident in using it, how can we expect them to be active consumers of healthcare? Knowing how to find a doctor, fill a prescription, how to use and pay for a medication, understanding the medical provider’s explanations, as well as insurance EOBs are all measures of health literacy.
HIL is not taught in school. Often, people learn about health insurance through a baptism by fire experience. A common thought most people get after receiving a bill in the mail from their doctor is “I thought my insurance covered this?” Unwittingly, people put a lot of reliance and trust on a medical community driven by revenue and an insurance system designed to minimize risk. Motivated financially, people become investigative sleuths navigating an itemized billing labyrinth to only discover they didn’t meet their deductible or went out-of-network not by conscious choice.
The healthcare system is flanked by healthcare providers on one side and health insurance plans on the other leaving employees figure out how it all works. If they’re lucky, their employers can step in to help.
Political efforts attempt to fix problems in our healthcare system like surprise medical billing, but legislation cannot address the unintended consequences of a healthcare system that is financed by fee-for-service players driven to maximize revenue through itemized billing, and with minimal or no upfront transparency to the patient in any consolidated manner.
HIL continues to be an uphill battle for employees.
Years ago, High Deductible Health Plans (HDHP) with Health Savings and Health Reimbursement Accounts were designed to be the great equalizer motivating consumers to take more ownership in their healthcare decisions. Now with over 40% of Americans enrolled in a HDHP, you would expect HIL to have increased.
A study published in Health Affairs, March 2019, illustrated how most people are not engaged in consumer behaviors. Only one in four enrollees (24.9 percent) had even talked with a medical provider about how much a service would cost. Fewer had compared prices for a service at different places (14.4 percent), compared quality for a service at different places (14.0 percent), or tried to negotiate a price for a service (6.5 percent). A perception of futility fuels the lack of engagement in consumer behaviors.
Employers, insurance companies and the government may offer tools and resources to learn about health insurance. Ultimately, people need to take action to learn how to be active consumers and increase their health insurance literacy.