A Perilous Gap in Health Insurance Literacy

This was published as a Wall Street Journal Think Tank column on September 4, 2014.

It’s not a news flash that health insurance can be complex and confusing. But the health insurance maze can be a problem, especially if you have never had health insurance before or have not had it for a long time. That’s the case for about half of the uninsured and for many people enrolling in the new insurance marketplaces set up under the Affordable Care Act.

Consider:

People gaining coverage also have to understand the intricacies of provider networks in the plans they choose, especially if they have a health problem requiring specialty care. Otherwise, they could face high out-of-pocket costs to see out of network providers. It can also be important to understand how drug coverage is tiered – with brand-name drugs costing much more than generics – if people are dependent on expensive drugs.

Social scientists call this “health insurance literacy.” People need to know how to read and write in order to function as citizens and in today’s economy. But with almost everyone now required to have health coverage they also need to know how health insurance works.

The newly covered will learn as they go, sometimes with help from family members and friends. The news media – people’s main source of information on the ACA and health issues – have a big role to play. Government at all levels, community organizations, health care institutions and health professionals all have a role to play. Unfortunately, we all get tested on our knowledge every time we choose a plan, go to the doctor or fill a prescription.

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