Development of the Health Insurance Literacy Measure (HILM): Conceptualizing and Measuring Consumer Ability to Choose and Use Private Health Insurance

Abstract

Understanding health insurance is central to affording and accessing health care in the United States. Efforts to support consumers in making wise purchasing decisions and using health insurance to their advantage would benefit from the development of a valid and reliable measure to assess health insurance literacy. This article reports on the development of the Health Insurance Literacy Measure (HILM), a self-assessment measure of consumers' ability to select and use private health insurance. The authors developed a conceptual model of health insurance literacy based on formative research and stakeholder guidance. Survey items were drafted using the conceptual model as a guide then tested in two rounds of cognitive interviews. After a field test with 828 respondents, exploratory factor analysis revealed two HILM scales, choosing health insurance and using health insurance, each of which is divided into a confidence subscale and likelihood of behavior subscale. Correlations between the HILM scales and an objective measure of health insurance knowledge and skills were positive and statistically significant which supports the validity of the measure.

Building Health Insurance Literacy: Evidence from the Smart Choice Health Insurance™ Program

“…Most American adults (75 %) were moderately or very confident they knew how to use health insurance, yet when presented with a cost-sharing scenario only 20 % could estimate the correct cost of a doctor's visit (Paez et al 2014). The study also found that less than half (42 %) of those surveyed were unlikely or somewhat likely to find out what their health plan covered before they went for health care services (Paez et al 2014). To reduce the complexity and suboptimal decision-making, consumers prefer fewer options and information that is presented in a single or simplified format (Hibbard et al 2002;Loewenstein et al 2013).…”

“…The ACA addressed several factors associated with consumers' abilities to select a health insurance plan and make use of their health insurance benefits; however, during implementation, consumers' health insurance literacy received less attention (Paez et al 2014). For example, some states restricted the number of plans an insurer could offer on the health insurance marketplace to simplify the consumer's health insurance shopping experience (Dash et al 2013).…”

“…The Health Reform Monitoring Survey found that 61 % of consumers who were still uninsured after the first open enrollment period had heard ''little'' or ''nothing'' about tax credits or cost-sharing subsidies introduced by the ACA (Dorn 2011). In addition, success of health care reform is attributable, at least partially, to consumers' health insurance literacy (Paez et al 2014 Kim et al 2013;Loewenstein et al 2013). Together, these findings present an opportunity to increase awareness and understanding of the ACA and to address health insurance literacy.…”

“…In the context of the ACA, financial literacy is relevant to the selection and use of insurance whereas health literacy may be relevant to understanding new consumer protections under the ACA (e.g., essential health benefits including preventive care) (Fitzgerald et al 2015). Health insurance literacy is distinct from health literacy in the financial understanding required to estimate costs as well as the ability to understand different benefit structures (Paez et al 2014). The common ground between health insurance literacy and health literacy is the knowledge ''about health services and one's health status, and the ability to use this information to make decisions'' (Paez et al 2014, p. 226).…”

“…A strength of the study is the use of a clearly defined, conceptualized, and psychometrically tested measure of health insurance literacy (Paez et al 2014). By assessing program evaluation data from a health insurance literacy program, the study can help: (1) assess which groups are more or less health insurance literate, and (2) assess differential gains achieved in health insurance literacy by examining which groups respond to educational programming.…”