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Vast Majority of Americans Have No Idea How Health Insurance Actually Works

The American health insurance marketplace is sadly dominated by a bad mix of overconfidence combined with significant ignorance. While a majority of adults under 65 think they understand their policy, only a tiny fraction can even correctly answer a rather basic question about how much a doctor’s visit will cost them.

New data from the American Institute for Research found 61 of this group were at least somewhat confident they could choose the best health insurance plan for themselves. Yet when presented with an simplified version of an insurance plan’s cost sharing details only 20 percent correctly calculated how much a routine doctor’s visit would cost them.

In addition only half could identify the general characteristics of a health maintenance organization (HMO) and less than a quarter could do the same for a preferred provider organization (PPO).

Not surprisingly the survey found older, wealthier, more educated, and sicker people have high health insurance literacy. These are also generally the people most likely to already have insurance. As the administration tries to increase enrollment next it will likely be targeting people even less knowledgeable about health insurance than the general public.

Once again this highlights the fundamental flaw in the basic logic behind the Affordable Care Act. Even with the help of a fancy website, expecting regular people to be savvy insurance shoppers is completely unrealistic.

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Vast Majority of Americans Have No Idea How Health Insurance Actually Works

The American health insurance marketplace is sadly dominated by a bad mix of overconfidence combined with significant ignorance. While a majority of adults under 65 think they understand their policy, only a tiny fraction can even correctly answer a rather basic question about how much a doctor’s visit will cost them.

New data from the American Institute for Research found 61 of this group were at least somewhat confident they could choose the best health insurance plan for themselves. Yet when presented with an simplified version of an insurance plan’s cost sharing details only 20 percent correctly calculated how much a routine doctor’s visit would cost them.

In addition only half could identify the general characteristics of a health maintenance organization (HMO) and less than a quarter could do the same for a preferred provider organization (PPO).

Not surprisingly the survey found older, wealthier, more educated, and sicker people have high health insurance literacy. These are also generally the people most likely to already have insurance. As the administration tries to increase enrollment next it will likely be targeting people even less knowledgeable about health insurance than the general public.

Once again this highlights the fundamental flaw in the basic logic behind the Affordable Care Act. Even with the help of a fancy website, expecting regular people to be savvy insurance shoppers is completely unrealistic.

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Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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