Former Health and Human Services Secretary Kathleen Sebelius this week said the rollout of the Affordable Care Act and its online insurance marketplaces has afforded a “stunning revelation” about how little Americans know about health insurance.
Speaking with USA Today’s Susan Page, Sebelius said:
“One of the things that we have learned with the passage of the law, and certainly with open enrollment in 2014—and I think this will be true again in 2015—is that a lot of Americans have no idea what insurance is about, and have no idea, even if they have coverage, what it means, you know, what a deductible is, what a copay is, how to choose a network. Those are complicated terms.”
Sebelius added that overall financial literacy among Americans is surprisingly low, given the importance of proper health insurance.
“I think the financial literacy of a lot of people, particularly people who did not have insurance coverage, or whose employers choose their coverage and kind of present it to them, is very low,” she said. “That has been a stunning revelation.”
Sebelius was criticized for her remarks by conservative pundits, but her statements are rooted in reality. According to a study performed by researchers at the USC Schaeffer Center for Health Policy and Economics and the USC Dornisife Center for Economic Social Research, 42% of Americans are unable to explain what a deductible is.
Another 62% don’t understand the difference between and HMO and a PPO, and when it comes to the particulars of the ACA, a full 37% were unaware last year that there is a penalty for not having health insurance.
“The results are worrisome because the success of the Affordable Care Act hinges on competition among insurers lowering premiums and increasing the quality of coverage,” said lead author Silvia Helena Barcellos. “This only happens when people know what they’re choosing. There is no incentive for insurers to offer their best plans if people are not making informed decisions when choosing among these plans.”
The lack of knowledge is not to be blamed on the insurance community, however, says Bankrate.com analyst Doug Whiteman.
“There is a big push to get the world out to demographics like lower income people, but they can be very difficult to reach. These are people working more than one job, who are looking after their families,” Whiteman said. “They are very busy people who don’t have time to watch TV or pay attention to the news.”
Whiteman added that much of the lack of awareness is also likely self-imposed. According to a recent Bankrate survey, 17% of Americans who are planning on remaining uninsured past the March deadline are doing so primarily due to their opposition to the Affordable Care Act.
“That is a staggeringly high percentage,” he said.
