Early Consumer Testing of the Coverage Facts Label: A New Way of Comparing Health Insurance
Thursday, August 04, 2011
New Report Shows Health Insurance Labels Help Consumers Evaluate Plans
WASHINGTON, D.C. – A new report released today says consumers found a new type of health insurance disclosure to be a helpful tool in understanding their coverage options. The report, released by Consumers Union, the nonprofit publisher of Consumer Reports, is the culmination of consumer interviews and usability testing of Coverage Facts Labels, established in 2010 by the Affordable Care Act as a way for Americans to better understand the coverage offered by health plans.
Lynn Quincy, senior health policy analyst for Consumers Union and co-author of the report, said, “The Coverage Fact Labels were established to help consumers compare health plans apples-to-apples, so we feel consumer feedback must be incorporated in the design of the labels. We consistently heard that the labels helped clarify the purpose and value of health insurance, making shopping for a plan simpler.”
The new Coverage Fact Label takes traditional health plan information, such as premiums and patient cost-sharing, and calculates the bottom line cost for a consumer for several hypothetical medical scenarios such as having a baby, treating breast cancer, and treating diabetes. These coverage examples are part of a longer health insurance disclosure that will be used by all insurers starting in 2012. Two prototypes that were tested were developed by the National Association of Insurance Commissioners (NAIC).
Support for this study was provided by the New York State Health Foundation and the Missouri Foundation for Health.
“The accessible, easy-to-understand labels provide consumers with a reliable point of comparison and a better understanding of the coverage they get from their premium dollars,” notes James R. Kimmey, M.D., MPH, President & CEO of the Missouri Foundation for Health.
“The success of health reform will depend to a large degree on making insurance options understandable to consumers and helping them to make informed choices,” said James R. Knickman, President and CEO of the New York State Health Foundation. “The Coverage Facts label is an important component of meeting that need.”
Even as the label prototypes were well received, the consumer testing did suggest some changes to the prototypes. For example, they recommended reducing the number of disclaimers, making available short, understandable definitions of key terms commonly misunderstood by consumers, and developing additional medical scenarios that consumers could view online.
Quincy said, “Even with the Coverage Facts Label, many consumers will still need help understanding key elements of health plan descriptions. It’s clear that we need to continue developing and testing further adjustments to these disclosures to help consumers better understand health plan cost-sharing terms.”
To read the full report, please click here. The Coverage Fact Label prototypes developed by the NAIC can be viewed here and here. Each prototype contained the same three medical scenarios but the layout differed.
Testing took place in St. Louis, MO and Buffalo, NY. Participants were evenly divided between men/women; uninsured/ insured (non-group). A variety of education levels, ages (26-64), and race/ethnic background, and prior familiarity with health insurance.
David Butler or Kara Kelber, 202-462-6262