The Cost of Confusion: Insurance Access in America

Authored by: Sophie Rinzler

Art by: Grace Liu

Health policy discourse in the United States has long centered on insurance expansion as the primary mechanism for improving access to care. From the Affordable Care Act to Medicaid expansion initiatives, coverage rates are often treated as the central metric of progress. Yet obtaining insurance does not automatically translate into meaningful access. A growing body of evidence suggests that health insurance literacy – the ability to find, evaluate, select, and effectively use health insurance coverage – plays a critical and underrecognized role in shaping health behaviors, financial outcomes, and inequities in care.

Health insurance literacy extends beyond general health literacy. General health literacy refers to the ability to obtain, process, and understand basic health information needed to make appropriate health decisions. It encompasses understanding core insurance concepts such as premiums (monthly payments), deductibles (what patients must pay before coverage begins), and provider networks (which doctors and hospitals are covered). It also involves applying that knowledge in real-world decision-making contexts, including selecting plans during open enrollment and navigating care after enrollment. In a system characterized by plan variation and administrative complexity, these competencies are not trivial.

Empirical evidence demonstrates that insurance literacy is associated with measurable differences in health-seeking behavior. Individuals with lower health insurance literacy are significantly more likely to delay or forego medical care because of perceived cost, even when insured [1]. They also experienced higher levels of financial burden from medical bills, indicating that misunderstanding coverage structures can translate directly into economic hardship [2]. Similarly, research indicates that individuals with higher insurance literacy are more likely to utilize preventive and primary care services appropriately, suggesting that comprehension influences not only financial outcomes but patterns of care utilization [3].

Importantly, low health insurance literacy is widespread. National surveys indicate that only approximately one in five US adults report high confidence in their ability to understand and use their health insurance plan [4]. Although 75% say they understand terms like deductible, copay, and coinsurance, 30% report difficulty calculating out-of-pocket costs for plans they are enrolled in that rely on those same cost-sharing mechanisms [4]. These findings suggest that insurance literacy gaps are widespread rather than isolated.

Disparities in insurance literacy reinforce its relevance to equity. Evidence shows that racial and ethnic minorities, individuals with lower educational attainment, and those with limited English proficiency consistently score lower on measures of insurance literacy [5]. These disparities persist even after controlling for income, indicating that literacy is not simply a proxy for economic disadvantage [5]. Additional research suggests low insurance literacy is associated with challenges in selecting and using health plans and with reduced engagement in care, outcomes that may compound disparities tied to education and socioeconomic status [6].

Taken together, present literature supports conceptualizing health insurance literacy as a social determinant of health. Social determinants are typically defined as the conditions in which people are born, grow, work, and age that shape health outcomes [7]. If limited understanding of insurance structures systemically constrains access to care, increases financial vulnerability, and disproportionately burdens marginalized communities, then it operates similarly to other recognized determinants. 

Framing insurance literacy as a determinant shifts the analytic focus from individual responsibility to system design. Health insurance markets are characterized by complexity: plans that differ in what they cover, how much patients must pay out of pocket, and which providers are included. Individuals often struggle to compare plan attributes even when detailed plan information is available, particularly when decisions require forecasting future health care use and out-of-pocket costs across multiple possible scenarios [8]. In this context, confusion is not evidence of individual failure and rather a predictable outcome of the structural framework.

Policy responses should therefore operate on two levels: literacy enhancement and structural simplification. Targeted educational interventions – especially plain-language materials and brief teach-back-style counseling, alongside broader health literacy practices – have shown promise in improving patient understanding and confidence in carrying out needed care [9]. Community-based navigators, for example, are trained individuals (often based in hospitals or community organizations) who help patients enroll in insurance, understand their benefits, and navigate care by addressing logistical and language barriers [10]. For individuals seeking to improve their own insurance literacy, free resources such as hospital-based financial counseling services can provide practical starting points. Expanding access to these tools and integrating them into school or workplace financial literacy programs could help build foundational competencies at scale.

However, educational interventions alone are insufficient if underlying complexity remains unaddressed. Standardizing terminology across plans, simplifying explanation-of-benefits statements, improving real-time cost transparency tools, and limiting excessive variation in benefit design could reduce cognitive burden at the point of decision-making. Policymakers might also consider incorporating insurance literacy metrics into health equity assessments, formally recognizing its role in shaping disparities.

As coverage expansion efforts continue, evaluating success solely through enrollment statistics risks overlooking an essential aspect of access. A patient who avoids filling a prescription due to misunderstanding their deductible, or who delays preventative screening out of uncertainty about cost-sharing, remains effectively constrained by the system despite being insured.

Health insurance literacy highlights a broader lesson for health policy: access is not binary. It depends not only on formal coverage status but also on the ability to translate coverage into usable care. Recognizing insurance literacy as a social determinant of health emphasizes how equitable policy design must address both eligibility and comprehensibility. Coverage may be the entry point to the system, but understanding determines whether that entry results in meaningful care.

References:

1. Tipirneni, R., Politi, M. C., Kullgren, J. T., Kieffer, E. C., Goold, S. D., & Scherer, A. M. (2018). Association Between Health Insurance Literacy and Avoidance of Health Care Services Owing to Cost. JAMA Network Open, 1(7), e184796. https://doi.org/10.1001/jamanetworkopen.2018.4796

2. ‌Wiltshire, J., Liu, E., Dean, C. A., Colato, E. G., & Elder, K. (2021). Health Insurance Literacy and Medical Debt in Middle-Age Americans. HLRP: Health Literacy Research and Practice, 5(4). https://doi.org/10.3928/24748307-20211102-01

3. ‌Kakar, R., Combs, R. M., Hoepf Young, M., Ali, N., & Muvuka, B. (2022). Health Insurance Literacy Perceptions and the Needs of a Working-Class Community. HLRP: Health Literacy Research and Practice, 6(2). https://doi.org/10.3928/24748307-20220309-01

4. ‌14 stats that highlight the significance of health insurance literacy. (2025). Cigna Healthcare Newsroom. https://newsroom.cigna.com/stats-that-highlight-the-significance-of-health-insurance-literacy

5. ‌Health Insurance Literacy: Disparities by Race, Ethnicity, and Language Preference. (n.d.). AJMC. https://www.ajmc.com/view/health-insurance-literacy-disparities-by-race-ethnicity-and-language-preference

6. ‌Liu, E. (2025). Empowering Informed Choice: Advancing Health Insurance Literacy in a Complex and Costly System. HLRP: Health Literacy Research and Practice, 9(4). https://doi.org/10.3928/24748307-20250612-02

7. ‌World Health Organization. (2025). Social determinants of health. World Health Organization. https://www.who.int/health-topics/social-determinants-of-health

8. ‌Hero, J. O., Sinaiko, A. D., Kingsdale, J., Gruver, R. S., & Galbraith, A. A. (2019). Decision-Making Experiences Of Consumers Choosing Individual Market Health Insurance Plans. Health Affairs (Project Hope), 38(3), 464–472. https://doi.org/10.1377/hlthaff.2018.05036

9. ‌DeWalt, D. A. and J. McNeill. 2013. Integrating Health Literacy with Health Care Performance Measurement. NAM Perspectives. Discussion Paper, National Academy of Medicine, Washington, DC. https://doi.org/10.31478/201307f 

10. Natale-Pereira, A., Enard, K. R., Nevarez, L., & Jones, L. A. (2011). The role of patient navigators in eliminating health disparities. Cancer, 117(S15), 3541–3550. https://doi.org/10.1002/cncr.26264