Health insurance literacy is a complex issue that requires a multifaceted approach to address. Our goal throughout this project was to better understand health insurance literacy, its impact on people across the country, identify available resources, and propose steps to improve understanding of health insurance. This report will be valuable to policymakers aiming to grasp the intricacies of our healthcare system, community organizations interested in developing their own interventions, and/or healthcare facilities seeking to enhance access to care for their patient populations. The primary purpose of this report is to serve as the first comprehensive summary of health insurance literacy and the educational resources or interventions available to consumers nationwide. Gaining a clearer picture of what is currently available will help refine future initiatives. Additionally, we intended this report to serve as a template for community groups across the country to develop health insurance literacy interventions, as we not only compiled a list of resources but also evaluated initiatives and examined these issues through various public health perspectives.
With the passage of the Patient Protection and Affordable Care Act (ACA) and the increasing complexity of our health insurance system, health insurance literacy (HIL) has become a more prominent component of the healthcare system throughout the United States. Unfortunately, efforts to combat limited understanding of health insurance topics are frequently disjointed and lack systemic cohesion across various levels of federal, state, and local governments.
Health insurance literacy may be defined as the “degree to which individuals have knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own financial and health circumstances, and use the plan once enrolled” (Paez et al., 2014). Having a limited understanding of health insurance is associated with a higher likelihood of inefficiently utilizing your health coverage, increased difficulty in selecting health plans, and delayed care. HIL has been linked to the inefficient utilization of healthcare resources, adverse health-related outcomes, and financial hardship. Lower levels of health insurance literacy are strongly associated with increased use of the emergency department, an expensive healthcare resource, compared to more affordable and efficient primary care services (Tipirneni et al., 2018).
Patients with a limited understanding of their health coverage are generally less likely to utilize preventive care services (Yagi et al., 2021). Additionally, lower health insurance literacy leads to poor adherence to medication regimens (Morgan et al., 2008; Piette & Heisler, 2006). Health insurance literacy levels are low nationwide, affecting all demographic groups and ethnicities. Unfortunately, limited health insurance literacy disproportionately affects historically marginalized groups, including people of color and those of the lowest socioeconomic strata.
While decreased use of preventive services, poor medication adherence, and delayed care are detrimental, limited health insurance literacy also leads to patients being “underinsured” and accumulating significant medical debt (The Commonwealth Fund, 2020b). The Commonwealth Fund defines being underinsured as: “individuals who are insured all year, but their out-of-pocket costs equal at least 10% of their household income, or if their deductible is 5% of their household income” (The Commonwealth Fund, 2020b). The accumulation of medical debt leads to an inability to afford basic necessities, forcing individuals into a never-ending downward spiral of worsening health and further debt accumulation. However, numerous groups throughout the country are actively developing virtual tools and educational interventions to help patients choose adequate health coverage more efficiently.
While New Jersey currently offers resources such as GetCoveredNJ and requires standardized health insurance plans on its marketplace, several legislative measures could be implemented to further improve health insurance literacy. One proposed strategy involves creating a Health Insurance Literacy Task Force, which would be responsible for evaluating current educational resources, identifying knowledge gaps, conducting research, and recommending improvements through annual reports and pilot programs. To consolidate and centralize resources, develop workshops, and raise awareness, legislation could be proposed to implement a statewide health insurance literacy initiative.
Additionally, GetCoveredNJ could be supplemented by another website, which could serve as a health insurance literacy hub, that would include all health insurance literacy or educational resources that have been developed throughout the country and apply to residents of New Jersey. Other potential legislative proposals include requiring insurers to provide all communications, including marketplace information and summaries of benefits, at a simplified 5th or 6th grade reading level to ensure consumer understanding. Incorporating health insurance education into high school curricula statewide would also enhance understanding of important concepts. School districts throughout the state could be further incentivized through grants for those demonstrating success.
Similar grant programs could be developed that would support community organizations, allowing them to deliver workshops aimed at increasing local health insurance literacy. Lastly, health insurance pilot programs at community colleges and specialized certification programs for Community Health Workers would further equip individuals to aid community members in navigating our complex health insurance system.
Improving health insurance literacy is vital to correcting the deficiencies within our current healthcare and health insurance system. When patients can efficiently utilize their health coverage, there will be systemic improvements in overall health, reductions in cost, and future legislation proposals will be more successful.