Study: Consumers Don't Understand the Health Insurance They Have Now

A new study by George Loewenstein, to be published in the September issue of the Journal of Health Economics shows that those who currently have health insurance, including employer-sponsored plans, have a poor understanding of their coverage. Loewenstein and a team of researchers commissioned two surveys of covered Americans and found that only 14% could explain all four key health insurance concepts: deductible, copay, coinsurance, and out-of-pocket maximum. Only 11%, given all the necessary information, could calculate the cost of a four-day hospital stay to within $1,000. 

The findings articulate the conundrum employers face when offering health insurance to their employees: consumers do not understand traditional plans and would better understand a simplified plan, but a simplified plan would not have strong appeal to consumers, or cause them to change their health care choices. This is especially critical information for employers as they start to devise a communications strategy around their current health insurance offerings as they relate to exchanges and tax credits that may be available; employers should be looking to their coalitions for help on developing employee communications strategies.