Only 9% of people understand their health insurance
By: Eric Bricker, MD
A survey by one of the major health insurance companies found that only 9% of people understood the terms premium, deductible, co-insurance and out-of-pocket maximum.1
The vast majority of your plan members do not understand their health insurance.
Employers and their broker/consultants have been trying to educate employees about their health insurance for decades. The issue is not the education… the issue is that the plan designs themselves are Too Complicated.
The lack of plan member understanding has 3 specific implications for the cost of the plan and the quality of the care received by plan members.
- The financial incentives in the plan design do not work because they are not understood. High deductibles and co-insurance were meant to motivate plan members to be better healthcare consumers and seek out lower cost, higher quality care. Consumerism does not work if the price to the plan member (i.e. deductible and co-insurance) is baffling.
- The plan design creates dissatisfaction with the plan members. Uncertainty—especially uncertainty that costs money—can cause fear. No one likes it. Understanding the price in advance creates price certainty and manages expectations.
- Fear from uncertainty leads many people to not seek care when they need it. A recent survey found that 44% of Americans have “avoided getting healthcare services because they were unsure of the costs.”2 Not addressing health problems like diabetes and heart disease allows these disease to progress and become more serious. It’s better to seek care early than wait until it’s too late.
There is a better way.
A copay is a concrete price to the plan member that is known in advance and will not change at the time of service or after the service. A copay is understandable. A copay is knowable.
Traditionally, plans only used copays for doctor visits, but there are many other services in healthcare as well: labs, imaging, procedures, outpatient surgery, hospital stays.
If a health plan has copays for all of these services, then plan members would finally be able to understand their how their health insurance works.
When plan members understand their health insurance, then financial incentives to seek higher quality doctors and hospitals can actually work.
Plan members can receive better care and plan performance can improve.