Healthcare insurance jargon is costing Americans millions
Confused by health insurance plans, consumers are eager to do better
Choosing the optimal health insurance plan for their families is a challenge, it turns out, for most American healthcare consumers. A recent report in The New York Times found that Americans make mistakes more often than not when selecting a plan, and end up spending more money than necessary.
As a result, online health insurance tools that compare plans are gaining popularity. Even health insurance companies are providing consumers with cost-saving platforms that calculate the average cost of a procedure or doctor’s visit. These tools could help create more informed, less confused individuals and add another layer to the way they make healthcare decisions.
Healthcare marketers that learn how to capitalize on these tools will be better prepared in the long run and one step ahead of their competition.
The problem
Not understanding the basics of health insurance proves to be the major reason why Americans fail to make the right decisions. The New York Times cited a variety of studies which brought to light dozens of common mistakes people make when choosing a plan.
In one study, 71 percent of people couldn’t identify cost-sharing features of health insurance plans, which leads to errors such as overpaying for a lower deductible. Another study found that people don’t really understand what a “co-pay” is, or what the term “maximum-out-of-pocket” means — both staples of health insurance lingo.
The way a health insurance plan is worded often distorts a person’s perception of it. In a different study, researchers switched the meaning of a “gold” plan with the meaning of a “bronze” plan. The gold plan originally had more to offer than the bronze plan, but despite what it had to offer, the majority of participants picked the gold plan, anyway. Why? Researchers believe that “gold plan” sounded more appealing to them.
Similarly, the report stated that consumers tend to pick plans closest to the top of a list — just imagine how that affects someone selecting a plan in the Affordable Care Act market, which has over 40 plans from which to choose.
A solution
There is hope, though. Online tools such as Impact Health and eHealth compare health insurance plans and prices based on age, zip code, monthly income, marital status and medical information.
Other healthcare consumers concerned about high deductible plans and frustrated by pricey medical bills turn to cost estimator tools provided by health insurance companies. These help calculate the average cost of a procedure or doctor visit in a specific region, but the reliability of these websites has yet to be determined. For instance, an NPR report told the story of one person who, after using a cost estimator tool, went into an MRI thinking it would cost $500 and was shocked to receive a bill for four times that amount. That person soon discovered the hospital had purchased a new imaging center and the cost of the procedure had increased.
Other cost estimating tools are more accurate, such as United Health Care’s, which NPR cited is correct 80 percent of the time. However, UHC researchers admitted the tool has its limitations, specifically in that it can’t always predict what a doctor will do during a visit.
Nevertheless, the popularity of these tools is climbing and consequently changing the way healthcare consumers make decisions. While healthcare consumers are not necessarily savvy when it comes to purchasing plans, they are eager to find ways to do better. The hospitals and other healthcare entities that figure out how to best facilitate them will be the ones best positioned for the future.