journal 4-HSPM 412
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School
University of South Carolina *
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Course
412
Subject
Health Science
Date
Feb 20, 2024
Type
docx
Pages
2
Uploaded by BrigadierExplorationWaterBuffalo161
The first article, Why Health Insurance Literacy Matters
, explains how many Americans endure confusion and difficulties when choosing a health insurance plan. This is due to the fact that a large percentage of individuals lack the knowledge necessary to choose the right plan for them. For example, how many people would think to confirm that the surgeon and anesthesiologist are in their plan’s network when having surgery at an in-network hospital? Just 41% of the general public and 29% of the uninsured knew this was not guaranteed (Levitt, 2014).
The second article, Why Most People Won’t Shop Again for Health Insurance,
goes on to say that many consumers fail to actually read the policies for their health insurance because of auto-renewals. According to law, subsidies that help people pay for their premiums each month are supposed to be recalculated every year, but the federal government won’t recalculate for those who auto-renew, possibly leading them to overpay for their insurance (Sanger-Katz, 2014) The same forces that lead people to stick with an expensive cellphone plan or watch the television program that follows their favorite show come into play with health insurance (Sanger-Katz, 2014).
This lack of knowledge regarding health insurance is referred to as a lack of health insurance literacy. Health insurance literacy measures the ability of an individual to have the knowledge and confidence in health insurance decision-making. Understanding health insurance and all of its components is difficult and it is not commonly taught. The complexity of these plan
choices tend to cause confusion for the consumer and typically ends up in the consumer picking the choice that is recommended to them, usually by the seller. This causes asymmetric information between the consumer and seller that ultimately hinders a consumers ability to make informed
enrollment decisions. Asymmetric information is when a party, typically the seller, is more knowledgeable than the other.
A consumers persistence in health plan choices despite offers of different plans is known as health insurance inertia. This phenomenon leads firms to rely on inertia to retain market share,
because they assume that many consumers will stay with the same plan. And many consumers do, as they are reluctant to revisit their plan choices in subsequent years due to the complexity of making an informed decision for health insurance. There are several costs suffered by the consumer caused by the intricacy of plan choices. The multitude of information and various options in health insurance comes at a psychological cost to the consumer because it is too much for the consumer to obtain all at once. The consumer will in turn suffer an economic cost because
they might never change their plan and end up overpaying in the following years.
I believe that the best way to solve this consumer inertia in the health insurance market is to create simplified explanations for the consumer that each seller must legally present before initiating a transaction. There should also be some sort of informed consent that both parties must sign, similar to accepting treatment in a doctors office. References
Levitt, Larry. “Why Health Insurance Literacy Matters.”
JAMA
, JAMA Network, 10 Feb. 2015, https://jamanetwork.com/journals/jama/fullarticle/2108874.
Sanger-katz, Margot. “Why Most People Won't Shop Again for Health Insurance.”
The New York Times
, The New York Times, 11 Dec. 2014, https://www.nytimes.com/2014/12/12/upshot/why-most-people-wont-shop-again-for-
health-insurance.html.
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