'Dismal' Understanding of Health Plans Among Consumers
The results were "dismal," says George Loewenstein, PhD, a professor of economics and philosophy at CMU, and the lead researcher on the study. Only 14% of respondents understood basic, everyday insurance terms such as coinsurance, copayments, deductibles, and out-of-pocket payments.
Only 11% were able to calculate their share of a hospital bill. In the interest of full disclosure, however, I have to admit that question stumped me, too
By the way, the respondents were between the ages of 25 and 64, had private health insurance, and were the decision makers about their medical care. So they had some basic knowledge of the system.
Behavioral economists at the University of Pennsylvania, Stanford, Harvard, and Yale universities and the University of Chicago, as well as professionals at a health insurance company also participated in the research.
The findings confirm Loewenstein's worse fears that few people actually understand even the basic fundamentals of the medical insurance programs they pay for each month. "Insurance plans incorporate all sorts of incentives designed to encourage customers to make specific types of decisions. What is the likelihood [consumers] will respond to these incentives if they can't understand the most basic elements of plan design?"
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