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December 15, 2015

Choosing a Health Insurance Plan: Complexity and Consequences

Author Affiliations
  • 1Carnegie Mellon University, Pittsburgh, Pennsylvania
JAMA. 2015;314(23):2505-2506. doi:10.1001/jama.2015.15176

Individuals who dread the annual ritual of choosing a health insurance plan might take solace in learning that they are not alone in feeling overwhelmed by the complexity of plan choice. For many, selecting a health plan is a source of considerable confusion and distress. The complexity of plan choice arises in part from wide variation among plans across the 4 features that determine how health costs are shared between the insurer and enrollee: the deductible, co-payment, co-insurance, and out-of-pocket spending limits. Consumers aspiring to make an informed choice across plans must evaluate the trade-off between each of these cost-sharing features and premiums, after carefully considering their projected health expenses, because paying for greater cost-sharing makes most sense if a person anticipates significant medical costs. Recent research, however, suggests that most consumers do not understand even the basics of health insurance. A 2013 survey of 202 insured US adults found that only 14% could answer 4 simple multiple-choice questions regarding the definition of cost-sharing features. Additionally, when presented with a simplified plan, most respondents were unable to accurately estimate the cost of their medical services.1 Complicating decisions further, plans typically differ on additional dimensions, such as which physicians are included in the network, the medical services covered, and insurer reputation for the speed and ease of processing claims.

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