High Health Insurance Literacy Tied to Medicare Advantage Enrollment

Medicare beneficiaries with high health insurance literacy were more likely to enroll in Medicare Advantage and select low-cost plans with high Medicare Advantage star ratings, compared to those with low health insurance literacy, according to a study published in JAMA Network Open.

Health insurance literacy—an individual’s ability to seek, obtain, and understand insurance coverage—can play a crucial role in selecting a health plan. Having a complete understanding of coverage options may help individuals choose a plan that best suits their health needs.

Health insurance literacy can be especially beneficial for Medicare beneficiaries, as they can choose between traditional Medicare and Medicare Advantage. Medicare Advantage beneficiaries then have the option of multiple plans that consist of different premiums, Medicare Advantage star ratings, and benefits. 

Past evidence has suggested that low health insurance literacy may lead to Medicare beneficiaries choosing plans with high costs and poor quality.

To understand the association between health insurance literacy and Medicare coverage choices, researchers gathered data from the 2015-2016 Medicare Current Beneficiary Survey on 6,627 Medicare beneficiaries.

The researchers asked whether participants agreed that they had the information they needed to make an informed comparison among different health insurance choices. 

Then, researchers asked how difficult or easy it was for participants to review and compare their Medicare coverage options. 

Lastly, participants were asked whether they reviewed or compared their Medicare coverage options annually or less annually. 

More than half of the Medicare beneficiaries (63 percent) completely or somewhat agreed that they had the information needed to compare health insurance choices. Even more beneficiaries (80 percent) responded that it was very or somewhat easy for them to review and compare their coverage options.

However, only 45 percent of beneficiaries said they reviewed or compared their coverage options at least once every year.

Medicare beneficiaries who reviewed or compared their coverage options annually and were subsequently classified as having high health insurance literacy were more likely to enroll in a Medicare Advantage plan (38 percent) than those with low health insurance literacy (27 percent).

Beneficiaries who reported having information to make coverage comparisons and beneficiaries who reported that it was easy to review and compare coverage options were also more likely to choose a Medicare Advantage plan compared to those who did not meet the health insurance literacy measures.

Beneficiaries with high health insurance literacy who enrolled in Medicare Advantage were more likely to choose plans with 4 to 4.5-star ratings or unrated plans than beneficiaries with lower health insurance literacy. These beneficiaries were also less likely to enroll in plans with 5-star ratings.

Additionally, Medicare Advantage plans with monthly premiums of $1 to $50 saw higher enrollment among beneficiaries with high health insurance literacy.

Medicare Advantage beneficiaries with high health insurance literacy were also more likely to enroll in plans that had a maximum out-of-pocket limit of less than $4,000 and were less likely to select a plan with an out-of-pocket limit between $4,000 to $5,500.

The study results also revealed that health insurance literacy was limited among beneficiaries with low socioeconomic status. The likelihood of reviewing or comparing healthcare coverage options annually was lower among beneficiaries with less than a high school education, dually eligible for Medicare and Medicaid, and older than 80 years.

“Because individuals who might have potentially improved coverage choices were the least likely to review or compare coverage options annually, programs targeted to them may help to enhance decision-making quality for disadvantaged populations, possibly reducing disparities in enrollment decisions,” researchers wrote.

Adequate health insurance literacy may help beneficiaries choose a quality health plan with low premiums instead of a costly plan with poor coverage, according to the researchers.

“Policymakers should develop programs to make health insurance information accessible and understandable across diverse and older adult populations and to encourage annual review and comparison of coverage options,” the study concluded.