Confused About Health Insurance? Take Our Quiz! - NPR (blog)

Any day now — assuming the government manages to fix HealthCare.gov — millions of people will start shopping for health insurance.

Will those shoppers know what they're doing? More to the point, if you're one of those shoppers, will you know what you're doing?

Here's a quick quiz, courtesy of economists George Loewenstein and Saurabh Bhargava, who study what people know (and what they think they know) about health insurance. The economists have used longer versions of these quizzes in their research.

Question 1: Which of the following best describes a deductible?

• A. An amount deducted from your paycheck to pay for your insurance premium.


• B. The amount deducted (covered) out of your total yearly medical expenses.


• C. The amount you have to pay before your insurance company pays benefits. A deductible is a fixed dollar amount that you have to pay for certain types of healthcare each year before insurance kicks in. Among the 97% of people who thought they knew what this meant, 81% answered correctly.


• D. The amount you pay before your health expenses are covered in full.

Question 2: Which of the following best describes a copay?

• A. A specific dollar amount you pay for a specific service. A copay is the fixed amount you have to pay for medical services. (The insurance company covers the rest.) So if you go to the doctor and the person at the front desk says, “Your copay is $20,” she’s telling you to reach into your pocket and hand over $20. Every single respondent said they knew what this meant, but only 71% chose the right answer.


• B. A specific dollar amount your insurer pays for a specific service.


• C. A fixed percent of the cost of a procedure that you have to pay (the insurer pays the remainder).


• D. The amount your employer contributes to paying for your health premium.

Question 3: Which of the following best describes coinsurance?

• A. A specific dollar amount you pay for a specific service.


• B. The total amount you are required to pay until you reach your deductible.


• C. The percent of the cost of medical services that the insurer pays. Coinsurance is the percentage of health care costs you have to pay after you have paid your annual deductible. Among the 57% of people who said they knew what this meant, 59% answered this question correctly.


• D. The amount your employer contributes to paying for your health premium.

Question 4: Imagine that you are faced with a hypothetical choice between alternative insurance plans that differ only in their deductible and premium (i.e., other plan features are identical). Which plan best suits your needs?

• Plan A has an annual deductible of $350, and a monthly premium of $157.


• Plan B has an annual deductible of $500, and a monthly premium of $112.


• Plan C has an annual deductible of $750, and a monthly premium of $104.


• Plan D has an annual deductible of $1,000, and a monthly premium of $60. Plan D is the best plan no matter what. You save so much in premiums that, no matter how much or how little health care you use, this plan will be cheaper than all the others.

Question 5: Imagine you again face a hypothetical choice between a new set of alternative insurance plans that differ only in their deductible and premium (i.e., other plan features are identical). Now which plan best suits your needs?

• Plan A has an annual deductible of $350, and an annual premium of $1884.


• Plan B has an annual deductible of $450, and an annual premium of $1344.


• Plan C has an annual deductible of $700, and an annual premium of $1248


• Plan D has an annual deductible of $1,000, and an annual premium of $720. Again, plan D is the best option no matter what. This is a less complicated version of the previous question, with the monthly premiums made into annual amounts. Only 35% of people answered this question correctly.

While the share of people who answered each question correctly varied, the vast majority of people who took the quizzes got at least something wrong.

And this isn't just some academic artifact: Bhargava and Loewenstein are leading an ongoing study of some 50,000 real-world choices that people make when shopping for insurance — and found that 65 percent of the time, people choose plans that are more expensive than other options but don't provide more benefits.