Consumers' Knowledge about their Health Insurance Coverage

This paper describes how much families know about their health insurance coverage and investigates whether consumer education and simplified benefit structures would improve knowledge. Families' perceptions about their insurance benefits were measured in two household surveys administered in six sites. Knowledge was assessed by comparing families' responses with policy data collected from the carrier. The vast majority of families understand insurance policies that specify one or two parameters in their benefit provisions. However, more complex payment structures are not well understood. Increased exposure to information in the plans leads to increased knowledge which suggests that education programs could improve the general level of knowledge. We conclude that if market strategies for allocating medical resources are pursued, simplifying insurance benefit structures and educating consumers about their insurance benefits would aid consumers in making more informed economic choices about medical care.