Under the Affordable Care Act (ACA, also known as “ObamaCare”), every American is encouraged to seek health insurance coverage. However, many consumers lack confidence to make health insurance choices on their own. Less than half the Federal and state exchange purchasers, Medicare members and others who have a choice of multiple health plans each year said they are extremely or very prepared to make the right choice. Not surprisingly, the uninsured are least prepared to make a health plan choice. Only one-third of Medicare members have a high level of confidence in their ability to select a health plan while 50% of individual product buyers are confident in their preparedness.
Health insurance in general is a mystery
Even when contemplating general issues regarding health insurance, something is lacking. Only 22% of consumers surveyed said they are very confident that they “know most of the things they need to know about health insurance.” A similar percentage indicated they are very confident they “understand health insurance terms.” Males are more confident than females, college graduates are more confident than High School graduates and high income households are more confident than low income ones, but even in the most extreme cases less than one-third of consumers are very confident regarding health insurance usage and terminology.
They looked, but couldn’t find
To compensate for unpreparedness and a lack of confidence, over 40% of consumers said they looked in the last year for information in written materials or on the Internet regarding how their health plan works. Individual product members are more likely to search for information than Medicare members. Younger consumers are almost twice as likely as seniors to seek this kind of information about their health plan. More importantly, almost one-quarter of those who sought information on their plan did not find what they were looking for in every situation. In separate questions, one quarter of consumers said they looked for information regarding the expected out-of-pocket costs for various medical services and nearly one-third looked for information regarding the cost of prescription medications. Once again, at least 40% of searchers sometimes had trouble finding the cost information they sought.
At the core of bad decision-making
A lack of confidence in their ability to select health insurance and a lack of information to guide their decisions appears to be leading many consumers to make poor decisions related to the health insurance coverage and health care in general. Twenty percent of consumers do not have a personal doctor, including 74% of the uninsured. The least healthy adults under 65 years of age are also the most likely to be uninsured. When choosing their current health plan, fifty percent of consumers spent less than 1 hour evaluating the options and selecting their plan. In total, 75% spent less than 2 hours on this important decision.
Despite a wide variety of choices and steadily increasing prices industry wide, two-thirds of consumers did not change health plans from 2014 to 2015. Three-quarters of Medicare members did not change plans in the past year. Furthermore, when faced with a hypothetical situation where their health insurance premium increases 20% at their next renewal, 44% said they would just pay the rate increase to keep their current plan. Only 49% would try to find another plan closer in price to what they have today and 7% said they would drop health insurance coverage entirely. Over half those with Medicare and employer group coverage said they would renew their current plan and pay the rate increase.