Health Insurance Literacy

November 4, 2014

A recent national survey by the American Institute for Research (AIR) tackled the challenge of measuring Americans’ “health insurance literacy.” AIR defines health insurance literacy as:

“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 their families’—financial and health circumstances, and use the plan once enrolled.”

This is a mouthful, but simply put, health insurance literacy means having the knowledge and technical know-how to select and use the best and most affordable health plan that meets your needs.

The Affordable Care Act empowers individuals to be their own health care advocates, their own price checkers, their own quality control measurers. This makes being health insurance literate an essential skill, but it’s not one that can be acquired overnight.

A startling statistic from AIR reveals just how unprepared many people are to manage their own health care coverage choices. Three out of four Americans surveyed said they believe they know how to use health insurance, but just one in five could correctly calculate how much they would owe for a routine doctor’s visit.

The 2013 AIR survey was completed by 828 people aged 22 to 64 who were uninsured, privately insured or had Medicaid.

AIR breaks health insurance literacy into four main areas: knowledge, information seeking, document literacy, and cognitive skills.

Knowledge means knowing insurance terms and concepts, such as the definition of a premium (paying for insurance that protects against an unforeseen medical event). It also includes understanding types of healthcare services and enrollee rights.

Information Seeking is the ability to find unknown information and distinguish between credible and not credible sources of information. Examples include locating eligibility requirements and navigating health care or insurer websites.

Document Literacy is the ability to understand and follow directions, fill out forms, and follow schedules, such as provider or drug tier schedules. These are the basic mechanics of applying for insurance.

Cognitive Skills are required to accurately assess one’s own preventative care needs (called “wellness”) and personal risk factors. Key skills include being able to calculate out-of-pocket costs, assess value, and formulate questions.

All of these four areas come together, according to AIR, to comprise “self-efficacy,” which is the ability to perform the tasks, such as correctly filling out forms, asking the right questions, and assessing one’s own health needs, “with confidence.”

Some of these skills come with age, as evidenced by the following chart (Exhibit 3), taken from the AIR survey report:

Screen Shot 2014-10-30 at 4.07.28 PM

Those who are young and or have never had health insurance before face a steeper learning curve, but the report also showed that knowledge and skills increase with use (Exhibit 4).

Screen Shot 2014-10-30 at 4.10.44 PM

For more on health insurance literacy, including a checklist to help consumers pick the right plan, click here for the full AIR report.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: