Some of you may remember home economics classes, now called family and consumer sciences. Although nutrition, cooking, and healthy living featured prominently in these classes, one of the items taught was personal finance and budgeting.
A dwindling number of middle and high schools offer family and consumer science courses. Findings from a recently released survey by Policygenius show how challenging health insurance is for many American consumers to understand. Perhaps it’s a good time to revisit the importance of educating future consumers.
Healthcare is one of the biggest expenses consumers make. Adding up premiums, deductibles, and cost-sharing for healthcare services and technologies, spending by consumers on healthcare comprises on average more than $6,000 per person on an annual basis.
In the Policygenius survey, the gaps in consumer knowledge of rudimentary concepts stand out:
Other key findings include:
The Policygenius survey results are consistent with a 2017 survey conducted by UnitedHealthcare, which showed that only 9% of Americans demonstrated an understanding of all four of these basic health insurance terms: Health plan premium, health plan deductible, out-of-pocket cap or maximum, and co-insurance.
In the 2017 survey, while approximately two-thirds of Americans understood either the term “health plan premium” or “health plan deductible,” less than half knew the definitions of “out-of-pocket maximum” and “co-insurance.”
The lack of consumer understanding of health insurance, coupled with inadequate or unclear messaging from government and private insurers, is a major problem when health plan members are supposed to comparison shop for providers and services. This is especially relevant during open enrollment periods.
The importance of improving consumers’ understanding of the fundamentals of health insurance is paramount in light of all the legislative and executive branch talk about transparency of hospital and drug prices. What good is transparency if consumers don’t have a fundamental understanding of basic health insurance terms? Here, transparency is a necessary but insufficient condition for establishing demand conditions that are more conducive to a competitive market. The informed consumer is a better consumer. And, a better educated consumer will also hold insurers, hospitals, physicians, and drug companies more accountable.