Do you find health insurance confusing? If so, you’re definitely not alone.
A recent survey reveals that American consumers rank health insurance as one of the most complex, difficult-to-understand products on the market. Confusion about co-pays, deductibles and coverage leaves many wondering what they’re even paying for.
Industry experts say health care itself is a complicated service, but consumer advocates say health insurers could do more to simplify their products. More transparency in pricing, clearer wording and comprehensive summary-of-benefits statements could make health insurance easier to understand, these advocates say.
In last place
The 2012 Global Brand Simplicity Index surveyed more than 6,000 people to uncover perceptions of various brands. The findings revealed consumer demand for simpler communication and experiences among many industries. Across 25 industries, the health insurance sector ranked dead last. Of 125 brands listed in the index, four of the bottom six were health insurers.
Jack Duvernay, vice president at Egan Insurance Agency in New Orleans, says consumers frequently express confusion about co-pays, deductibles and coverage. As health insurance has become more expensive, employers and consumers have been moving toward plans with higher deductibles and co-pays.
“Many consumers were just accustomed to managed care with low deductibles, and they expect insurers to cover more costs,” Duvernay says. “It’s just not that way anymore.”
Elaine Saly, a health policy analyst at consumer advocacy group Families USA, says it’s no surprise that consumers are confused about health insurance.
“Consumers can’t make good decisions about health insurance when they can’t understand it,” Saly says.
The complexities of health care
The health care industry is, by nature, extremely complicated, says Susan Pisano, a spokeswoman for America’s Health Insurance Plans, a trade association for the health insurance industry. Diagnostics, medical tests, operations, prescriptions and the complicated nature of illness, disease and our bodies mean health insurance always will be more complex than car insurance or homeowner’s insurance.
One of the biggest problems is that a lot of the information people seek about health care system, such as deductibles, co-pays and final costs, is not easy to access, she says.
The complex flow of information, billing and services among health care providers (doctors and hospitals), insurers and patients makes it difficult to understand who’s covering what. Pisano says the industry is working to simplify information about health insurance.
More transparency on the way
According to the Global Brand Simplicity Index, health insurance has a “case of chronic complexity” and loses more than $5 billion a year in revenue because of unnecessary complications. John Metz, chairman and CEO of Just Health, a consumer advocacy group, says the complexities often deter people from buying or using health insurance.
“More transparency in pricing and accountability could make all of the difference in the world. It should be clear what you are paying for and getting,” Metz says.
Saly says federal health care reform eventually should bring more transparency to the industry. New rules require group health plans to provide consumers with clear, consistent and comparable information about health plan coverage. It also requires insurers to provide easy-to-understand benefits summaries and a uniform glossary of commonly used health insurance terms.
As it stands now, health insurers must outline three common scenarios – having a baby, treating breast cancer and managing diabetes. Additional scenarios are likely to be added. Saly says such coverage examples are critical because many consumers are in the dark about how much a major health problem will cost what their insurance will cover.
“Having these tools may actually incentivize more people to purchase and use health insurance,” Saly says.