Health Plan Illiteracy: study finds many do not understand their benefits

Health plan illiteracy is alive and well, according to J.D. Power and Associates. The consumer market research firm’s 2008 National Health Insurance Plan Study finds that one in two plan members don’t understand their plan.

In this second year of the survey, J.D. Power notes that, as consumers understand the benefits of their Benefit, their satisfaction with the plan increases. Thus, there is a virtuous cycle that happens between a plan and an enrollee when communication is clear and understood.

J.D. Power looked at member satisfaction in 107 health plans throughout the U.S. in terms of seven key metrics: coverage and benefits; choice of doctors, hospitals and pharmacies; information and communication; approval processes; claims processing; insurance statements; and customer service. The survey was conducted in November and December 2007.

Last year, Abt Associates found that most insured workers don’t understand simple health plan language. I abstracted some of Abt’s findings in this chart that I use in many of my presentations. Health plan illiteracy goes beyond general health illiteracy — this is people blessed with benefits who don’t ‘get’ them.

Hot Points:
Having access to a health plan at the workplace is a Major
Blessing these days. It is also an eroding benefit, as we learned
earlier this week from the Robert Wood Johnson Foundation’s paper, Squeezed: How Costs for Insuring Families are Outpacing Income.
It’s all about customer engagement. For employers to get their fully
bang-for-health-buck, they need to pressure plans to adopt the consumer
goods marketing hat and take a page out of the books of beloved brands
and market segmentation gurus.

Not only would plans bolster
their consumer satisfaction ratings — they could become beloved
consumer brands in health care and build more trusted relationships in
their communities. This could, ultimately, improve healthy
communities…at least among the insured citizens.

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PharmacistMikeBrian BaumPetercolejamesd Recent comment authors
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Even as a pharmacist I rarely can understand what my plan covers or what doctors I can go to. The new benefit packages always come with a website to find this information but then the websites state that the information they contain may be incorrect. Back in the day you go simply go over to your HR department to get the answers you need. However, now one just get stuck on 800 numbers.

Brian Baum
Brian Baum

I’ve often puzzled over the dynamics of the health plan industry. If you use some very “loose” metrics roughly 20% of a typical plan membership drive 80% of the cost of the plan services. This implies that about 80% of a plans members have very little interaction with their health plan, drive very little cost to the health plan and therefore, by most accounts – should represent the “best” customers of the plan. (They pay a monthly fee and cause very little cost.) Contrast this with the 20% of the “high consumption” plan members – they pay their monthly premium… Read more »


The only health plan literacy you need in single-pay countries is – feel sick, see a doctor.


Health is totally depend upon about how you carry yourself.There should be a daily routine in the life style.At a certain age you must make a diet chart from the dietician.


Fine posting Jane. Health plan illiteracy is just the tip of the iceberg when it comes to “quality care”. I’m sure your bloggers have read the IOM report on the subject. 30 milion adults can’t read their medication bottles, one half the population can’t read a simple consent form for surgery, (does that make the physician guilty of assault?), only 1/2 of all the prescriptions in America are taken correctly resulting in 10% of all hospital admissions. None of the present healthcare plans put forward address this serious issue, just her’s your health card, go for it. I would like… Read more »


Hmmm … I’m not sure I’m completely comfortable with the use of the word ‘illiteracy’ here. I’m not sure it quite captures the relationship involved. Why should you or I have to learn a new language to go to a doctor’s office or pay for what should be – but generally isn’t – a simple and straightforward bill? Wouldn’t it make more sense to hire a team of worker bees to sit down and translate all of this and make it easier for people to deal with the system? The dirty little secret is that by confusing people and making… Read more »

Michael D. Miller, MD

This may explain the uptake of consumer directed/high deductible (CDHD) plans. If people can’t understand their “regular” benefit plans, how are they going to be convinced to use an CDHD plan? Of course, if their employer can save a lot by essentially shifting costs to the employees, they will surely manage to communicate the potential cost savings of these plans to the employees. Do you think this is why CDHD plan adoption is much greater for employees of large companies?