Saturday, August 16, 2014

Americans don't understand health insurance

The comprehension study shows that people have a limited understanding of traditional health insurance. Only 14% of the sample was able to answer correctly 4 multiple choice questions about the four basic components of traditional health insurance design: deductibles, copays, coinsurance and maximum out of pocket costs (‘MOOP’). Similarly, many respondents were unable to calculate the cost of basic services covered by the traditional insurance plan. Most strikingly, only 11% were able to correctly answer a fill-in-the-blank question about the cost of a hospitalization. ...

[If] consumers don’t understand their own health insurance policies, it is unlikely that they will respond to the incentives embedded in those policies.
--Loewenstein et al., "Consumers' Misunderstanding of Health Insurance," on an over-engineered product