How Prepared are Americans for the Affordable Care Act? Results from a Survey of Health Insurance Literacy and Health Reform Knowledge

This paper uses data from the American Life Panel to investigate whether individuals are well informed to make adequate health insurance choices in the complex environment brought by the Affordable Care Act (ACA). Under the ACA, many individuals are more responsible for choosing health insurance than they ever were before. In particular those making choices on the health insurance marketplaces or exchanges are expected to compare a variety of different insurance options. However many may lack the knowledge necessary to make informed choices.  We document knowledge of health care reform and health insurance literacy using a nationally-representative survey of the U.S. population, with special attention to subgroups most likely to be affected by the ACA.

We report on a survey designed to measure knowledge of both health insurance in general and the ACA more specifically. The survey was fielded in September of 2013. Questions about health insurance literacy cover topics such as deductibles, co-pays, and in-network vs. out-of-network providers. Questions about ACA knowledge cover topics such as the mandate, exchanges, standardization of insurance coverage on the exchanges, and subsidies. 

Results suggest that a substantial share of the population is unprepared to navigate the new health insurance environment. One-half of the respondents did not know about the new health insurance exchanges, and 41% could not correctly describe a deductible. Those earning 100–250% of federal poverty level (FPL) correctly answered, on average, 4.1 questions about health reform (out of 11 questions) and 4.7 questions about health insurance (out of 7 questions). This compares with 6.1 and 5.9 correct answers, respectively, for those in the top income category (400% of FPL or more). Even after controlling for potential confounders, a low-income person is 52% less likely to have high knowledge of ACA, and 56% less likely to be highly knowledgeable about health insurance than a person in the top income category. Uninsured respondents scored lower on health insurance knowledge, but their knowledge of ACA is similar to the overall population. Educational campaigns about the new law and the basics of health insurance contracts, as well as better information on available resources, will be crucial for ACA’s success.