1 Skill, comprehension, and making an informed choice among health plans: An experimental study Ellen Peters, C.K. Mertz, and Judith H. Hibbard

2 Policy Challenge: As the CDHP/ HSA high deductible plan designs are offered to a broader range of enrollees, will consumers with limited numeracy and literacy skills be able to comprehend their options and make an informed choice?

3 Literacy: The Scope of the Challenge 90 million Americans (47 percent) have limited literacy skills (Source: The National Adult Literacy Survey) Even those with adequate literacy skills may be challenged by the complex literacy demands of the healthcare environment – selecting a health plan – adopting a healthy lifestyle – choosing providers – managing one's care It’s a potential driver of healthcare costs (IOM, 1994)

4 Health Literacy: What Is It? Health Literacy is the ability to read, understand and effectively use basic health-related information to make appropriate health care decisions.

5 But health literacy should also be about HOW information is provided Information can be easier or harder to evaluate If it’s easier to evaluate, consumers and patients can comprehend and use that information more effectively in health choices (Hibbard & Peters, 2003; Hibbard, Slovic, Peters, & Finucane, 2002; Peters, Dieckmann, Dixon, Hibbard, & Mertz, in review; Peters, Lipkus, & Diefenbach, in press)

6 Our study: Community sample (N=303) 48% female 76% white Average age = 37; range = 18 to 64 years Stratified on education in order to get range of ability – 49% <= high school degree or some trade school; – 51% some college or more

7 Our study: Reading Literacy Measured with a short version of the Test of Functional Health Literacy (TOFHL) We used only Passage B (Gazmararian et al., 1999)

8 Our study: Numeracy The ability to understand and use basic probability and mathematical concepts Measured using scale from Lipkus, Samsa, & Rimer, 2001 Plus additional items

9 Experimental manipulations Subjects see information about two health plans. – Plan A is a new HSA plan – Plan B is a more traditional plan Six conditions – Long framework, information side-by-side – Short framework, information side-by-side – No framework, information side-by-side – Long framework, common and unique information – Short framework, common and unique information – No framework, common and unique information

10 Benefits Summary, Usual format = Side-By-Side Comparison Plan APlan B Waiting period for pre-existing conditions11 months Lifetime benefits maximum$2,000,000 Annual deductible$2,400 single; $4,800 family $400 single; $800 family Out-of-pocket max per year$4,000; $8,000$2,000; $4,000 Monthly premium you pay$35;$165$50; $250 Cost you pay for office visits20% after deductible$15 copay / visit Cost you pay for preventive care visitNo cost$15 copayment Cost you pay for outpatient services20% Emergency services20% Urgent care in an urgent care facility20%$35 copay Cost you pay for prescription drugs20% Include a Health Savings Account (HSA)?YesNo Amt employer contributes to HSA / year$1,400; $2,800Not applicable

11 Benefits Summary, Common and Unique Comparisons How the plans are the same:Plan APlan B Waiting period for pre-existing conditions11 months after the contract takes effect Lifetime benefits maximum$2,000,000 Cost you pay for outpatient services20% of cost after deductible Cost you pay for emergency services20% of cost after deductible Cost you pay for prescription drugs20% of cost after deductible How the plans are different:Plan APlan B Annual deductible$2,400; $4,800$400; $800 Out-of-pocket max per year$4,000; $8,000$2,000; $4,000 Monthly premium you pay$35; $165$50; $250 Cost you pay for office visits20% after deductible$15 copay Cost you pay for preventive care visitNo cost$15 copayment Cost you pay for urgent care20% after deductible$35 copay Include a Health Savings Account (HSA)?YesNo Amt employer contributes to HSA / year$1,400; $2,800Not applicable

12 Benefits Summary, Short Framework Advantages of a new type of health plan, Plan A, as compared to the more traditional Plan B: Lower monthly premiums More control over how you use your health care dollars Disadvantages of Plan A compared to Plan B: Potentially higher costs for heavy users of health care More effort required to manage your health insurance benefits What the plans might cost you:Plan APlan B You will have to spend at least this much per year in premiums: $420 ($1,980) $600 ($3,000) But you might have to spend as much as this in premiums and out-of-pocket maximum (minus HSA contribution for Plan A only): $3,020 ($7,180) $2,600 ($7,000)

13 What we want to explain Choice – Which health plan would you choose? (Plan A includes an HSA; Plan B is a more traditional plan) Comprehension (Index = number correct of 6 items below) 1. Which plan is better for a person who needs a lot of health care? 2. Which plan is better for a person who needs very little health care? 3. Which plan has lower monthly premiums? 4. How much would it cost with Plan B to go to an Urgent Care Facility? 5. What would be the out-of-pocket maximum cost per year for a single person with individual coverage under Plan A? 6. What would be the out-of-pocket maximum cost per year for a single person with individual coverage under Plan B?

14 Hypotheses 1. Comprehension will be lower for consumers with fewer literacy and numeracy skills 2. The framework will help consumers better comprehend the health plans 3. Providing common and unique information will help consumers better comprehend the health plans 4. This will be particularly true for individuals with lower skill levels

15 Independent and strong impact of numeracy and literacy on comprehension Comprehension =.35** Numeracy +.25** Literacy (R 2 =.28, F(2,295)=57.1, p<.0001)

16 Less numerate comprehend less t(296)=7.6, p<.0001

17 Despite understanding less, the less numerate chose HSA Plan A more often Chi-square (1, N=298)=6.8, p<.01

18 With the usual format, most can identify lowest premiums.

19 Low numerate cannot identify the best plan if you need a lot of health care

20 Lack of comprehension is related to choices Chi-square (1, 51) = 5.5, p=.02

21 Having information Side-by-side helped comprehension for both groups. Low Numerate High Numerate F(1,286)=4.7, p<.05

22 Having a framework improved comprehension of the high numerate only Low Numerate High Numerate

23 Conclusions How information is presented influences comprehension – Side-by-Side presentations helped both groups – Providing a framework helps the high numerate This is a difficult task for those with less skills – They choose the HSA plan more often – But understand less of the information – Deciding based on factors that they can understand – lower monthly premiums