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Lynn QuincyApril 11, 2012

Improving the Nation’s Health: Making Sure Consumers Can Play Their Role

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Yes, THAT Consumer Reports

The 2010 Affordable Care Act

….it requires a whole new script

Health Reform Implementation Timeline(selected reforms)

Estimated Health Insurance Coverage in 2019

SOURCE: Congressional Budget Office, March 20, 2010

Total Nonelderly Population = 282 Million

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In early March, heard oral arguments on:• The constitutionality of the individual mandate;• Whether the individual mandate can be severed from the

remainder of the ACA;• ACA's provisions concerning expansion of the Medicaid

program; and• Procedural questions regarding application of the Anti-

Injunction Act to challenges against the ACA (stems from the Fourth Circuit's ruling in September 2011).

A decision is expected June 2012.

Selected reforms are being debated by the Supreme Court

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But there’s much more…New Health Plan Transparency

Summary of Benefits and Coverage formNew public reporting on rates, customer satisfaction, denied claims, out-of-network provisions, etcNew quality reporting

New Provider Quality TransparencyValue of employer provided coverage reported on W-2.Financial relationships among providers, suppliers, and manufacturers will be publicly disclosedStronger appeal rights for consumers with “self-insured” employer coverage.

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Keep in mind …

The health reform law's true impact will be shaped by the decisions of

consumers, employers, federal health officials and states.

We have a UNIQUE opportunity

to educate consumers so they can navigate

health insurance and health care.

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Opportunity Arises from…

Tremendous consumer confusion about the law and poor health literacy and health insurance literacyNew public data reporting can help in decision-makingConsumers are looking for information – especially Fall of 2013Some funding exists for ACA outreach

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Let’s get into the weeds…

Consumer testing in support of the development of the Summary of Benefits and Coverage form resulted in:

Improvements to the form Better understanding of consumers’difficulties understanding health insuranceSpotlighted the dearth of consumer testing

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Three CU studies explored how consumers shop for health insurance

CO, MDMay 2011Actuarial Value Concepts

MO, NYMay 2011“Coverage Facts Label” (pages 5-6)

IA, NH, CA, OHSept-Oct 2010Pages 1-4 of new health insurance disclosure

Locations: Mid-sized cities in…

When:Study Examined:

Participants were evenly divided between men/women; uninsured/ insured (non-group). A variety of education levels, ages (26-64), and race/ethnic background, and prior familiarity with health insurance.

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Lesson #1:

Abandon the image of a careful shopper capable of weighing the myriad costs and benefits of their health insurance options

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Lesson #2: Consumers Dread Shopping for Health Insurance

I think medical insurance is probably one of the hardest things for me that I shop for. And I think one of the hardest things is to figure out what’s covered.

-quote from report: Early Consumer Testing of New Health Insurance Disclosure Forms

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Lesson #3: Consumers Doubt the Value/ Purpose of Health Insurance

Many view health insurance as pre-paid health care, rather than insurance.If they don’t expect to use much health care next year, doesn’t seem like a good value.

Note: there is different from the notion that “I’m young and invincible.” Rests on a skewed notion of what insurance is.

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Implications

Convey the value and purpose of insurance in a compelling wayExpect to provide health insurance education using a multi-layered, “just-in-time” approachShowing what the plan would pay for a serious illness often altered these views

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Lesson #4: Consumers want a good “value”but can’t calculate value

Consumers care about cost.

But they don’t want the lowest cost plan, they want the best value plan they can afford.

Notion of value is sophisticated: •scope of services covered•share of the cost paid by plan•sometimes the quality of providers

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Lesson #5: Consumers are confused by cost-sharing terms

This is the greatest area of confusion.

They don’t know the vocabulary: deductible, coinsurance, benefit maximum, allowed amount, out-of-pocket maximum

The underlying concepts are complex and they must be used together to estimate patient costs for services (do copays count towards the deductible? the out-of-pocket maximum?)

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Sophisticated computation skills are required

Is this a pharmacy expense?

Have I met the medical

deductible?

Have I met the pharmacy

deductible?

No Yes

No

Pay full amount

Yes

Have I met the annual

Out-of-pocket Max?

No

Pay nothingSubject to any annual benefit

limits?

No Yes

Yes

Pay full amount

No

Yes

More calcs M l

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Implications

We are effectively asking consumers to shop blindfolded.

It is like providing health plan detail in a foreign language.

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Which would you choose?

Terms:

εκπεστέου είναι$1,000 7 μητρότητα έχει$5.000 όφελοςόριο

Terms:

εκπεστέου είναι$4.000· ημητρότητα δενείναικαλύπτονται

Health Plan BorHealth Plan A

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Lesson #6: Some medical coverage terms are also confusing

What is the difference between primary and preventive care?

What are specialty drugs?

How does a diagnostic test differ from a screening?

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ImplicationsAssume that 85% of traditional insurance information is ignored/not used.Assume consumers will use cognitive short-cuts to “get through” the task of shopping for coverage. Consider developing short-cuts to help consumers to make an informed choice:

Actuarial Value TiersMeasures of network adequacyCoverage Facts Labels

Avoid jargon (allowed amount, benefit limit, preferred/non-preferred etc.) Use terms that are familiar to most consumers. Substitute terms will have to be tested.

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Lesson #7: Consumers need a “mental map” to navigate a complex topic like insurance

If this “map” or framework is missing, decisions aids like glossaries or well-designed disclosures can do little to help consumers—there is nothing for them to attach the information to.

If they have prior experience with health insurance, consumers view new information through that lens. Example: Copays counted towards the deductible in my old plan so this plan probably works the same way.

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If they don’t have prior experience with health insurance…

… they’ll use other experiences – like car insurance.

Moderator: So let’s say [you] had a really bad year and you had two accidents… you think each time you're going to have to pay that deductible?

Participant: Yeah, because it’s just like an accident in a car. If I crash my car 10 times I [would have to keep paying the deductible] …it’ll be a loss for the insurance company just having a one-time deductible.

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Implications

Provide a mental map. When people can see the “bigger picture” of how insurance works, they have a “map” on which to tack the details.Explain health insurance from the point of view of what it means to them.Short glossary definitions and other decision aids should be provided but need to be accompanied by that “map” to be effective.

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Lesson #8: Providing clarity is insufficient; information must also be trusted

If consumers don’t trust the information, they won’t use itTrust levels are very low for health insurers Even when consumers have a good grasp of the information in front of them, they often don’t trust their analysis. They worry about the “fine print” because health insurers are “tricky.”

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Implications

Cultivate an image as a trusted source for informationManage consumer expectations – don’t oversellPartner with trusted entitiesMerit consumer trust:

vet health plans well, strive for stability in offerings,invest in good communications, test communications with consumers, andengage in these activities over the long run

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Lesson #9: Consumers need a manageable number of choices

Given the cognitive difficulty of evaluating their choices, consumers don’t want an unlimited number of choicesBetter: a manageable number of “good” (vetted) choices Even Better: reducing the number of features that can vary between plans makes them easier to compare

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Implications

Pay attention to the number of options facing consumers. Consumer testing in Massachusetts led that Exchange to reduce choices from 27 to 9.Embrace the ACA provisions that standardize health plan designs. Consider additional benefits standardization.Help consumers navigate the remaining variation by explaining the implications of their choices.

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Failure to Address Consumer Confusion has Grave Consequences

Consumers find themselves underinsured, too often leading to medical bankruptcyUnder-insured consumers act like uninsured consumers – they delay getting care Inability to effectively compare plans undermines the health plan marketplaceStrains customer help lines

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The Ability to Measure Consumers’Health Insurance Literacy Would Change the Conversation

Financial Literacy Measures(multiple)

Health Literacy

Measures(multiple)

Health InsuranceLiteracy

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What is Health Insurance Literacy?

A working definition:Health insurance literacy measures the

degree to which individuals have the knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own (or their family’s) financial and health circumstances, and use the plan once enrolled.

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Don’t we have a lot of health literacy measures?

There are at least 13 tools that measure health literacy BUT health insuranceliteracy is different.

A recent compilation of over 200 studies, none of which examine health insurance.

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Project Timeline

STATES USE THE MEASURE TO PREPARE FOR 2014 REFORMS (outreach, health plan comparisons, etc)

Jan 2013draft users manualDec 2012 field test/revise instrumentJul-Nov 2012preliminary testingApr-Jun 2012

interview stakeholders, refine conceptual model

Feb-Mar 2012roundtable report releasedFeb 2012 expert roundtableNov 2011

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Participate in Our ProjectJoin the list-serv and follow our progressRead the expert roundtable report that kicked off the projectParticipate in our research committeeParticipate in our dissemination committeeHelp us identify funding sourcesBecome a spokesperson for the project

Find out more: http://www.consumersunion.org/health_insurance_literacy_project

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Thank you!

Please email Lynn Quincy with any questions:

quinly “at” consumer.org