Misunderstanding health insurance leads some to overspend

May 2, 2014 by Valerie Debenedette
Misunderstanding health insurance leads some to overspend

When selecting a health insurance plan, both uninsured, tech-savvy young adults and uninsured low-income, rural adults had trouble understanding their insurance options. Many selected insurance plans that were more expensive than required for their health care needs, finds a new study in Health Services Research.

These findings highlight challenges faced by people shopping for health insurance on the federally-run and state-run insurance exchanges in the United States.

"We wanted to look at two very different groups of uninsured people," said Andrew J. Barnes, Ph.D., assistant professor of healthcare policy and research at Virginia Commonwealth University School of Medicine in Richmond. "The surprise was that both of them did poorly in understanding and choosing health insurance."

Both study groups were asked about their health care use in the previous year to estimate what their probable future needs would be. Subjects were also surveyed about health insurance and insurance terminology to determine their understanding of how health insurance works and questioned to determine their ability to understand and use numbers, or numeracy.

They were provided information on either three or nine health insurance plans and asked to choose the plan that gave them the coverage they believed they needed, imagining their health would be exactly the same in the coming year as the previous one.

Individuals in both groups had difficulty making their choices based on what they believed their coverage needs would be. Among all respondents, 40 percent chose plans that would cost them $500 or more than a cheaper plan that was likely to meet their expected health care needs. Having a lower understanding of health insurance reduced the likelihood of choosing a cost-effective plan by 16 percent. Having higher levels of numeracy was associated with higher scores on understanding health insurance.

Having a greater number of plan choices appeared to reduce comprehension, the study noted. "One of the reasons is that it is just so complicated," Barnes said. A person shopping for insurance must consider what their health care needs have been in the past, forecast their needs for the future, and then go through a lot of information on each plan, he noted. "You have to have a really good understanding of the terminology, and frankly, good math skills."

The issue of numeracy in health care is an important one to highlight, said Susan Pisano, vice president for communications for America's Health Insurance Plans, a Washington-based trade organization. "The importance of numeracy is gaining greater attention because of the role it plays in so many facets of . It plays a role in choosing a plan in relation to costs."

Explore further: Uninsured face hurdles choosing health insurance

More information: "Determinants of Coverage Decisions in Health Insurance Marketplaces: Consumers' Decision-Making Abilities and the Amount of Information in Their Choice Environment." Barnes AJ, Hanoch Y, Rice T. Health Serv Res. 2014 Apr 30. DOI: 10.1111/1475-6773.12181. [Epub ahead of print]

Related Stories

Uninsured face hurdles choosing health insurance

November 11, 2013
The new federal health-care law gives millions of Americans access to medical insurance. However, choosing the right coverage—a daunting task for most people—could be even more difficult for those who have never had health ...

Insurance status affects where young adults seek health care

April 23, 2014
Perhaps due to a lack of or inconsistent insurance coverage, young adults age 18 to 25 tend to go to the doctor's office less often than children or adolescents, yet have higher rates of emergency room use, finds a study ...

Federal data show health disparities among states

December 12, 2013
The slow rollout of a new federal health insurance marketplace may be deepening differences in health coverage among Americans.

Report projects health care costs to dip slightly

April 14, 2014
A new government report says the Affordable Care Act's health insurance subsidies will cost a little less than previously thought.

Insurance exchanges may benefit small medical practices

November 27, 2013
(HealthDay)—Small medical practices may not need to offer their employees health insurance, although there may be advantages to doing so, according to an article published Nov. 10 in Medical Economics.

Race a bigger health care barrier than insurance status

November 8, 2013
Race appears to be a larger factor in disparities in health care use than whether or not a person has health insurance, finds a new study in the Journal of Health Care for the Poor and Underserved. Blacks, Hispanics, and ...

Recommended for you

High-fat diet in pregnancy can cause mental health problems in offspring

July 21, 2017
A high-fat diet not only creates health problems for expectant mothers, but new research in an animal model suggests it alters the development of the brain and endocrine system of their offspring and has a long-term impact ...

To combat teen smoking, health experts recommend R ratings for movies that depict tobacco use

July 21, 2017
Public health experts have an unusual suggestion for reducing teen smoking: Give just about any movie that depicts tobacco use an automatic R rating.

Opioids and obesity, not 'despair deaths,' raising mortality rates for white Americans

July 20, 2017
Drug-related deaths among middle-aged white men increased more than 25-fold between 1980 and 2014, with the bulk of that spike occurring since the mid-1990s when addictive prescription opioids became broadly available, according ...

Aging Americans enjoy longer life, better health when avoiding three risky behaviors

July 20, 2017
We've heard it before from our doctors and other health experts: Keep your weight down, don't smoke and cut back on the alcohol if you want to live longer.

Parents have critical role in preventing teen drinking

July 20, 2017
Fewer teenagers are drinking alcohol but more needs to be done to curb the drinking habits of Australian school students, based on the findings of the latest study by Adelaide researchers.

Fresh fish oil lowers diabetes risk in rat offspring

July 19, 2017
Fresh fish oil given to overweight pregnant rats prevented their offspring from developing a major diabetes risk factor, Auckland researchers have found.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.