Learning by buying in the ACA marketplace

An analysis of data from the Urban Institute's quarterly Health Reform Monitoring Survey by Rice University researchers, focusing specifically on Texas, finds widespread ignorance of basic insurance terms like premium, deductible and copay.  About a quarter of all Texas respondents reported a lack of confidence in those most basic terms, with higher percentages for terms like co-insurance and max out-of-pocket.

Not surprisingly, percentages reporting lack of confidence in their understanding of these terms was much higher among the uninsured, the poor or near-poor (under 139% FPL), and Hispanics. The uninsured "no confidence" rates were more than double those of the insured, as were rates for those with incomes under 139% FPL compared to those above that level. Hispanic "no confidence" rates ranged from double to triple those of whites.

While the rates are disturbing  the Rice scholars* provide an interesting hypothesis about the knowledge gap between the insured and uninsured:

It is possible that people who do not understand health insurance terminology are less likely to obtain insurance. A more likely explanation is that people who are able to obtain insurance have the opportunity and need to become familiar with the terms.

Buying a health plan: Don't try this at home?

In a recent post, I cheered a bit while noting that most ACA marketplace users who should have bought silver-level health plans did in fact buy silver plans.

That is, most people whose income qualified them for subsidies reducing their plan deductibles and out-of-pocket costs -- subsidies available only with silver plans -- did buy silver. Somewhat less than 20% of those eligible for Cost Sharing Reduction (CSR) bought bronze plans, which have higher deductibles and copays and disqualify a buyer from CSR..

Perhaps a 15-20% "bad choice" rate is too high. After speaking with ACA navigator Kate Kozeniewski of Resources for Human Development (RHD), however, I had to wonder why the numbers weren't worse.

Premiums reign supreme

I asked  Kozeniewski, a program coordinator who helped oversee assistance provided to 45,000 people in Pennsylvania while directly assisting hundreds herself, whether clients generally understood the importance of CSR.

"We found across the board that people were not aware that cost sharing was not available to them unless they chose a silver plan," Kozeniewski said. Almost invariably, she said, people would look at the lowest monthly premium available (as reduced according to their income) and say,"This seems like it's within my budget, so I'll start here, and if this works, this is fine."

An all-too-hidden benefit in ACA insurance

Eugene R. Anderson, a pioneer in insurance coverage litigation for policyholders for whose firm I've long worked, was fond of saying that insurance is a unique product. You pay up front, and you get what you pay for much later, if ever.

That's less true of health insurance than of most other forms of insurance, since we all need some healthcare in most years. But it's true of high-deductible health insurance.  And that may prove a problem for public perception of the Affordable Care Act.