Making Health Insurance Cost-Sharing Clear to Consumers

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<p>To enable consumers to compare their health insurance plan choices and understand the terms of coverage, the Affordable Care Act calls for a new insurance disclosure form using a standard layout and standard terms and definitions. Beginning in 2012, all insurance plans will be required to use this form, which will greatly improve consumers' ability to select health plans that meet their needs. <br /><br />A new Commonwealth Fund <a href="/publications/issue-briefs/2011/feb/making-health-insurance-cost-sharing-clear-consumers-challenges">issue brief</a> reports on a Consumers Union study that examined consumers' reactions to an early version of the form. While testers were able to use the form to make hypothetical choices among health plans, many were confused about plan cost-sharing requirements. The findings were then used to make the form more consumer-friendly, and they will also inform the work of the Department of Health and Human Services as it implements this provision of the law. <br /><br />"Deep-seated consumer confusion and lack of confidence with respect to health plan cost-sharing underscore the need for standard forms like the new disclosure form and highlight the challenges of making insurance terms sufficiently clear to allow consumers to make informed choices," says Lynn Quincy, the brief's author. She notes that reconciling plans' deductible levels, coinsurance, copayments, and patient out-of-pocket limits requires "a high level of comfort with complicated and often unfamiliar terms," in addition to numeracy skills. <br /><br />Beginning in 2014, most health plans sold will need to conform to an essential benefits standard, greatly enhancing the ability of consumers to compare plans. These plans must also offer four tiers of cost-sharing based on actuarial value. While the new disclosure form and standardized benefits will help consumers understand and choose among their insurance options, additional decision aids like plan performance summary measures and benefit calculators, as well as further consumer testing, may be necessary. </p>
<p>The Consumers Union study was cofunded by The Commonwealth Fund and the California HealthCare Foundation. <br /><br /></p>