REPORT: Early Consumer Testing of New Health Insurance Disclosure Forms (December 2010)
Funding support provided by The Commonwealth Fund and The California HealthCare Foundation
The Affordable Care Act (ACA) calls for health insurers to begin using a new, standard health insurance disclosure form to convey the benefits and cost-sharing provisions of their health plan offerings. This form must employ standard terms and definitions and is intended to all consumers to “compare health insurance coverage and understand the terms of coverage (or exceptions to that coverage).” The ACA requires all insurance plans to use this form – group and non-group, grandfathered and non-grandfathered – beginning in 2012. As such, these disclosures will affect over 180 million insured Americans when the requirement goes into effect.
This Consumers Union study explores whether early prototypes for this Summary of Coverage form meet the needs of consumers. Specifically, do study respondents find the form appealing, does the form provide the information that respondents are looking for and is it a usable document?
The study used focus group discussions and usability exercises to address these questions. These testing sessions included 112 men and women in four small cities around the country. These respondents were evenly divided between those currently uninsured and those enrolled in nongroup (individually-insured) coverage. Importantly, the respondents exhibited a wide variety of health insurance literacy levels, enabling us to gauge the effectiveness of the forms with respondents well versed in health insurance terms, as well as those who are unfamiliar with such concepts.
We find that initial responses to the prototype health insurance disclosure forms were positive. The forms were perceived as visually appealing and consumer-friendly. The forms were well suited to comparing health plans due to their grid-style presentation and because they contained most of the information that respondents wanted to see (for example, premiums and whether their doctor was in the plan’s network).
The critical and most important exceptions to these favorable reviews were:
- Significant participant difficulty with cost-sharing concepts (allowed amount, coinsurance, benefit limits, deductibles, etc.)
- Significant participant difficulty with covered service definitions (understanding what was included in specific service categories, like preventive care)
These areas of confusion not only frustrated respondents but could lead them to select a plan that was not in their best interest. Significantly, this confusion was almost universal. We observed difficulty with cost-sharing among fairly well-educated folks who had always been insured and among participants who had long periods of being uninsured.
While many policymakers, regulators and researchers may have already have a general understanding of consumer difficulties with cost-sharing concepts, studies such as this one provide the critical, nuanced understanding needed to fine-tune disclosure forms. To illustrate, many participants affirmed that they were familiar with the term “coinsurance.” Yet, when asked to use the prototype coverage forms to estimate their cost-sharing for a particular service, some were unsure who paid the 20%—the policyholder or the insurer. Other participants understood who paid 20%, but didn’t understand “allowed amount” – the amount of money the coinsurance rate is applied to. Consequently, even some of these more savvy participants could not use the information to figure out their costs under a given medical scenario.
In addition to identifying consumer responses to the prototype forms, this report contains valuable information about how consumers approach health insurance purchasing. For example, shopping for health insurance was an aversive task, fraught with anxiety for many respondents. They were afraid of making a costly mistake if they chose the wrong plan. Even respondents with good health insurance literacy skills lacked the confidence to choose a plan, reflecting a concern that it would expose them to potential financial liabilities.
We also saw that participants didn’t rely exclusively on the Summary of Coverage form to assess the plans. They combined information on the form with information from their past or current insurance plan in order to reach conclusions. For example, if their prior insurance plan didn’t count copayments towards the deductible, they assumed the plans in front of them operated the same way. This behavior suggests that a need for standardization and consistency of health insurance cost-sharing concepts so that consumers can learn how the various components interact, rather than relying on (possibly false) assumptions.
This deep-seated consumer confusion and lack of confidence with respect to health plan cost-sharing also underscores the challenges facing those tasked with implementing health reform. These findings have significant implications for any venue that provides comparative displays of health insurance information, like the future state exchanges and the HHS web portal. The findings also have implications for policies that rely on the ability of consumers to make informed health insurance purchasing decisions (such as “consumer driven health care” policies). Finally, they have implications for other consumer-facing documents like the “explanation of benefits” statement (EOB) insurers provide when claims are filed.
This Consumers Union study demonstrates how consumer testing can fill evidence gaps and help policy realize its intended goals. As the nation begins to roll out health reform, stakeholders of all types will be very vested in consumer responses to those changes. Policymakers, regulators and others should carefully consider the value of this type of testing and build consumer testing activities into the work of the special commissions and working groups that are tasked with health reform implementation.