Lack of health insurance 'literacy' can hurt consumers

Lack of sufficient “health insurance literacy” (HIL) can cause consumers to “experience administrative hassles, delays in care, denials of coverage, and receive unexpected medical bills,” according to a study by the University of Connecticut’s Health Disparities Institute.

“Health insurance literacy is an important skill that Connecticut residents must have to access the care they need while avoiding administrative hassles and costly errors,” the report said. “Our survey results show that many Connecticut residents, especially people of color, struggle to understand insurance terminology and perform financial calculations required in today’s complex plan designs.”

The report is based on results from a 2016 survey measuring the HIL of 516 adult Connecticut residents enrolled in a qualified health plan (QHP) through Access Health CT (AHCT). Among the specific findings:

·        Adults enrolled in an AHCT private plan answered eight out of 13 questions correctly (62 percent)

·        One in five 5 enrollees (20 percent) did not understand the use of the insurance word “premium”

·        Two out of three enrollees (66 percent) did not understand the word “formulary”

·        Only one out of three enrollees could calculate their out-of-pocket cost of a hospital bill when a deductible and a copay were part of the insurance benefit

·        Only four out of 10 enrollees knew that “in-network hospitals do not always have in-Network doctors”

Researchers said good health insurance literacy skills enable consumers determine when a service is covered by their plan (and how much of it is covered), figure out their out-of-pocket costs, save money on prescription drugs, doctors’ visit, emergency room or hospitalizations, avoid surprise medical bills, and reduce time-consuming and frustrating administrative hassles.

“As more people enroll in private health insurance, widely disparate HIL should be viewed as a previously underappreciated but remediable source of healthcare disparity,” researchers concluded. “These problems are difficult to overcome, but a state-wide strategy aimed ultimately at enhancing the value of health insurance for all is needed. In the short run an aggressive educational campaign, with additional resources from health insurance carriers and other stakeholders is the best way to start improving health insurance literacy.”

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