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POLICY
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Comprehension and Choice of a Consumer-Directed
Health Plan: An Experimental Study
Jessica Greene, PhD; Ellen Peters, PhD; C. K. Mertz;
and Judith H. Hibbard, DrPH
C
onsumer-directed health plans (CDHPs), which were introduced in 2000, enrolled 10% of covered employees in 2007.1
CDHPs are high-deductible health plans with an accompanying savings account. They were designed to provide enrollees
with financial incentives to contain their own healthcare costs. Enrollees
in CDHPs pay for their medical care with account funds or out of their
own pocket until they reach the deductible level, at which point standard
insurance coverage begins.
With greater exposure to healthcare costs, CDHP enrollees are
expected to make more cost-effective healthcare choices, like comparison
shopping for healthcare and reducing unnecessary medical care visits.
Unspent funds in the savings account may be rolled over for use in future
years, providing an incentive to conserve on healthcare. Because CDHPs
typically have lower premiums than traditional insurance,1 some policymakers view them as a vehicle for reducing the number of uninsured.2,3
Medicaid agencies also are starting to pilot a version of CDHPs with low
out-of-pocket costs, called Health Opportunity Accounts.4
Critics have raised a number of concerns over CDHPs. These
include the plans’ complexity, the potential for consumers to cut back
on “essential” medical services, their role in segmenting the risk pool,
and the fact that CDHPs are not designed to reduce healthcare costs
for those with the highest utilization.5-9 Some have raised the question
of how vulnerable populations, such as low-income persons and racial
minorities, will fare with CDHPs, due to their having less discretionary
income, lower literacy skills, and more limited access to Internet-based
information.10,11
This paper focuses on consumers’ understanding of CDHP design
among a largely low-income population. Because CDHPs potentially
require greater out-of-pocket spending than traditional health insurance, it
is important for consumers to understand differences in plan design when
selecting health plans. CDHPs also are more complex than other forms of
health insurance once consumers are enrolled. Depending on enrollees’
needs for healthcare, they may experience up to 4 different stages of coverage within a CDHP. In the first stage, consumers can pay for healthcare
costs using the savings account (or they
may opt to save the account funds for
In this issue
the future by paying out-of-pocket). In
Take-away Points / p375
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the second stage, which occurs if the
Full text and PDF
account is exhausted, healthcare costs
Web exlusive
are not covered and must be paid outeAppendices A to C
© Managed Care &
Healthcare Communications, LLC
VOL. 14, NO. 6
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Objectives: To examine the extent to which
numeracy predicts consumer-directed health plan
(CDHP) comprehension and health plan choice.
Also, to test whether comprehension can
be improved using different presentation
approaches.
Study Design: We conducted an experimental laboratory study in which 303 adults viewed information about a hypothetical CDHP and
a hypothetical preferred provider organization
(PPO) presented in several different ways.
Participants were randomized to view plan comparisons in a side-by-side or a common/unique
format, and whether or not to view a framework.
Methods: Participants completed a survey that
included comprehension items, numeracy and literacy assessments, and sociodemographics.
Multivariate regression models were developed
to examine the independent effects of numeracy
and presentation approach on CDHP comprehension and choice. Interactions between numeracy
and presentation approaches were tested.
Results: Although less numerate consumers
understood less about CDHPs, they were substantially more likely to select the CDHP.
Providing an overarching framework to highlight
the differences between the CDHP and PPO
boosted comprehension on items related to the
framework message. However, it reduced comprehension on items that were not related to the
framework, particularly among the less numerate.
Participants reported that the common/unique
presentation of comparative information was easier to understand, yet there was a trend toward
less comprehension using that presentation
approach.
Conclusions: This study highlights the difficulty
many consumers have in understanding comparative plan information and in making informed
healthcare choices. Findings also indicate that
some presentation strategies may help the less
skilled understand choices better.
(Am J Manag Care. 2008;14(6):369-376)
For author information and disclosures,
see end of text.
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of-pocket. In the third stage, once the high deductible is met
(typically $1500-$2000 for individuals),1 healthcare costs are
covered by a health plan with cost-sharing. Finally, in the
fourth stage, if an out-of-pocket maximum is reached, all
healthcare costs are covered by the health plan. Enrollees are
expected to use informational resources to make cost-effective decisions. This complexity may be more difficult for consumers with lower education and numeracy levels.12
To date, little research has examined consumers’ understanding of CDHPs. One study found that fewer than half of
enrollees in a CDHP said they knew “a lot” about the plan
prior to enrollment, though CDHP enrollees reported being
more knowledgeable than those not selecting the CDHP.13
Another study found that the CDHP plan selection process
differed considerably between salaried and hourly employees.14
Although some salaried employees described using computer
spreadsheet programs to compare likely out-of-pocket costs in
preferred provider organizations (PPOs) and CDHPs prior to
enrollment, hourly enrollees more often described confusion
about selecting the plan and how CDHPs work.
Two bodies of literature are related to the question of consumers’ understanding of CDHPs. The first focuses on consumer literacy (reading skills) and numeracy (numeric
literacy). In the United States, many more people have low
literacy and numeracy skills than in other industrialized countries.15 Based on the National Assessment of Adult Literacy,
only 13% of Americans have the skills to comprehend lengthy
prose or to synthesize multiple pieces of information in complex documents.16 We hypothesized that these skills, in particular numeracy, will be predictive of understanding the
differences between CDHPs and conventional health plans.
Prior research has found that literacy, numeracy, or a measure
of health literacy combining the 2 are positively associated
with similar types of health-related tasks, including consumers’ ability to extract quality information from comparative tables and confidence in making health coverage
decisions.17-19
Emerging literature has sought to improve consumer comprehension and informed decision making by simplifying the
presentation of comparative information. Experimental studies have documented that simpler displays of information—
those containing less information and that require less
synthesis—are in general easier for consumers to comprehend.
A recent study, for example, found that when consumers were
provided with quality indicators along with hospital characteristics (eg, the number of hospital beds), only 40% selected
the highest-quality hospital. However, when only quality indicators were provided, simplifying the data display and reducing the number of factors to consider, 62% of consumers
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selected the highest-performing hospitals.12 Two other techniques to simplify information presentation (listing health
providers by quality rankings rather than alphabetically, and
framing indicators so that higher numeric scores indicate better performance) also substantially improved comprehension
and informed decision making.12,20-23
There is evidence that information presentation may not
have the same influence on all consumers. Peters and colleagues found that using a traffic light symbol helped highly
numerate consumers select better-quality hospitals. However,
it reduced the ability of less numerate consumers to select the
best-quality hospital.12 The present study builds upon this
emerging area of study.
This study’s first goal was to examine the effect of numeracy on comprehension of CDHP design and informed decision
making among a largely low-income population. The second
goal was to test whether comprehension could be improved by
varying the way the information was presented. We randomized consumers to view different presentations of the same
comparative plan information to test the impact of presentation across all respondents and for those with high and low
numeracy skills.
We first tested whether presenting common/unique plan
attributes influenced comprehension and decision making
compared with listing plan attributes side by side. Our hypothesis was that the common/unique presentation approach
would require consumers to synthesize less information, and
therefore would result in higher comprehension levels across
all levels of ability.
We also tested the influence on comprehension and decision making of a framework that details the advantages and
disadvantages of a CDHP relative to a conventional PPO.
Educational theory suggests that if we provide consumers with
a framework for understanding a concept or the “big ideas,”
they will be more likely to understand the “little ideas” and
integrate new pieces of information into the framework.24
Because using a framework increases the amount of information that is presented, which may be difficult for those with
lower numeracy skills, we opted to test longer and shorter versions of the framework.
METHODS
To test these questions, we used an experimental study
design with a convenience sample of 303 adults age 18-64
years in Oregon. To ensure variation in numeracy and literacy skills, we recruited our sample so that approximately half of
the participants would have lower levels of education (a high
school diploma or less). Participants were randomly assigned
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Comprehension and Choice of a Consumer-directed Health Plan
to view 1 of the following 6 formats comparing the same 2
hypothetical health plans:
1.
2.
3.
4.
5.
6.
Long framework, information side by side.
Short framework, information side by side.
No framework, information side by side.
Long framework, common/unique information.
Short framework, common/unique information.
No framework, common/unique information.
One of the hypothetical health plans was a CDHP with a
$2400 deductible for individuals, and the other was a conventional PPO with a $400 deductible. For simplicity, we refer to
these plans as the CDHP and the PPO, even though CDHPs
generally rely on PPO coverage once the high deductible is
reached.
Side-by-side presentation comparisons are common in
presenting plan choices. We tested side-by-side presentation
against an alternative approach that presented common/
unique plan characteristics parsed out for the user. The sideby-side presentation compared the CDHP with the PPO on
13 characteristics, including premiums, cost sharing (office
visits, urgent care, outpatient services, emergency services,
prescription drugs, and preventive care visits), deductible levels, and out-of-pocket maximums. The common/unique version compared the plans on the same 13 characteristics, but
first presented the 5 characteristics that were similar in the
2 plans and then presented the 8 characteristics that differed. The 2 versions are shown in eAppendix Table A and
eAppendix Table B (available at www.ajmc.com).
The frameworks summarized the advantages and disadvantages of the CDHP relative to the PPO, and showed the minimum and potential maximum costs in the 2 plans. The long
framework listed 4 advantages and 4 disadvantages of the
CDHP, whereas the short framework listed 2 of each. In both
versions, the frameworks’ key messages were that the CDHP
had lower monthly premiums, but enrollees might have higher out-of-pocket costs if they used a lot of medical services.
The framework is provided in eAppendix Table C (available
at www.ajmc.com).
The dependent variables in this study were comprehension, plan choice, and ease of understanding information. The
key comprehension measure is an index made up of the number of correct responses to the following 6 questions comparing the CDHP (Plan A) and the PPO (Plan B):
1. Which plan is better for a person who needs a lot of
healthcare?
2. Which plan is better for a person who needs very little
healthcare?
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3. Which plan has lower monthly premiums?
4. How much would it cost with Plan B to go to an urgent
care facility?
5. What would be the out-of-pocket maximum cost per
year for a single person with individual coverage under
Plan A?
6. What would be the out-of-pocket maximum cost per
year for a single person with individual coverage under
Plan B?
Each question was followed by 2-4 response options, one
of which was correct. For some analyses, we also used 2 subindices of comprehension: one that included the 3 questions that directly related to the key framework messages
(questions 1-3), and one that included questions that did
not directly relate to the framework information (questions 4-6).
The plan choice question asked participants which plan
they would be more likely to choose for themselves. The easeof-understanding question asked participants to self-report
“how easy or difficult it was to understand the information
about the 2 health plans” using a 7-point scale (–3 = very difficult to +3 = very easy).
All participants completed numeracy and literacy assessments. The numeracy assessment included the 11 items from
Lipkus and colleagues,25 and 4 additional items developed by
Peters et al.12 We used Passage B of the Test of Functional
Health Literacy to assess reading literacy, which was used successfully by Gazmararian and colleagues.26 Participants also
provided basic sociodemographic information. The survey
packet included other unrelated studies and took about 1 hour
to complete on average. Each participant received $20 for
completing the survey.
Analytic Approach
To examine the influence of presentation approach (side
by side vs common/unique; and short, long, or no framework) by numeracy level, we first conducted factorial analysis of variance (ANOVA) tests. Factorial ANOVAs tested 3
null hypotheses: that the presentation approach is not related
to the dependent variable; that numeracy is not related to the
dependent variable; and that there is no difference in the relationship between presentation approach and the dependent
variable depending on the numeracy level. We focused primarily on the role of numeracy because distinguishing the 2 plans
largely requires comparing costs and cost-sharing levels. For
this analysis we dichotomized numeracy at the median score
(0-9, 10-15).
We then developed multivariate regression models. We
first examined the independent influences of numeracy, liter-
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acy, and the 2 presentation approaches on each dependent
variable, controlling for sociodemographic characteristics.
The health plan choice model used logistic regression because
the dependent variable was dichotomous. This model also
controlled for health status and the number of chronic conditions, which we expected to influence health plan choice.
We then developed multivariate models to test whether
there was an interaction between the presentation approaches and numeracy. To facilitate interpretation of the interaction terms, we interacted a dichotomized version of
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numeracy with each presentation approach. Because there
was little difference in influence of the 2 framework types in
the prior analysis, we collapsed the short and long frameworks together for the regression analyses.
RESULTS
Table 1 presents the sociodemographic characteristics of
this largely low-income sample of adults. Three quarters of
participants reported incomes of less than $20,000 a year and
only 44% were employed. Educational achieve■ Table 1. Description of Sample (N = 303)
ment was slightly lower than national averages.27
The sample was disproportionately young (46%
Percentage or
were under age 35 years) and white (74%).
Characteristic
Mean Score
Respondents were evenly split by sex.
Sociodemographics, %
Participants, on average, correctly answered 4
Sex
of the 6 health plan comprehension questions
Female
51.8
(Table 1). They assessed the comparative informaMale
48.2
tion as slightly easy to understand (mean of 1.0 on
Age, y
a scale of –3 to +3). Almost half (48%) said they
18-34
45.9
would have chosen the CDHP.
35-44
22.1
Numeracy was strongly related to comprehen45-64
32.0
sion, ease of understanding the information, and
Race/ethnicity
choosing the CDHP (Figure 1). Although the less
White, non-Hispanic
73.6
numerate consumers had lower comprehension
Hispanic
6.9
levels (3.0 vs 4.5 for consumers with higher numerOther race, non-Hispanic
19.5
acy) and found the comparative information hardEducation
er to understand than the more highly numerate
High school diploma or less
44.9
consumers did (0.8 vs 1.2), they were substantially
Some college/trade school
36.6
more likely to select the CDHP than the highly
College graduate
18.5
numerate consumers (56% vs 41%).
Work status
Figure 1 examines the influence of presenting
Employed
44.0
comparative data side by side versus using a comOut of workforce (student/retired)
20.0
mon/unique approach for individuals with higher
Unemployed
36.0
and lower numeracy. For both more and less
Income
numerate individuals, the side-by-side presentation
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