Association of Health Insurance Literacy With Enrollment in Traditional Medicare, Medicare Advantage, and Plan Characteristics Within Medicare Advantage

Abstract

Health insurance literacy helps individuals make informed choices. However, evidence suggests that Medicare beneficiaries experience low health insurance literacy, leading to high-cost or poor-quality coverage choices. To examine how health insurance literacy was associated with coverage choices between traditional Medicare (TM) and Medicare Advantage (MA), as well as within MA. This cross-sectional study included 6627 TM and MA enrollees, using data from the 2015-2016 Medicare Current Beneficiary Survey. Data analyses were conducted between May 1 and June 30, 2021. Three self-reported measures of health insurance literacy (presence of information to make an informed comparison, ease in reviewing and comparing coverage options, and annual review and comparison of coverage options). Enrollment in TM vs MA and enrollment in an MA plan with different characteristics (star rating, monthly plan premium, in-network maximum out-of-pocket limit, plan type, and provision of supplemental benefits). We included 6627 Medicare beneficiaries (3578 women [54.0%]; mean [SD] age, 75.13 [7.12] years). A total of 77 individuals were Asian (1.2%), 696 were Black (10.5%), 488 were Hispanic (7.4%), 5277 were non-Hispanic White (79.6%), and 225 (3.4%) were single races not of Hispanic origin (including American Indian or Alaska Native and Native Hawaiian) or were 2 or more races. Medicare Advantage enrollment was higher among individuals with higher health insurance literacy than those with lower health insurance literacy, especially for those who reviewed or compared coverage options annually than among those who did not (38.0%; 95% CI, 36.0%-40.1% vs 27.8%; 95% CI, 25.8%-29.7%). Among MA beneficiaries, those who reviewed or compared coverage options annually were more likely to enroll in plans with 4 to 4.5 stars and plans with monthly premiums of $1 to $50 by 4.6 percentage points (95% CI, 0.1-9.2 percentage points) and 4.8 percentage points (95% CI, 0.6-9.0 percentage points), respectively. However, enrollment in plans with 5 stars was 3.8 percentage points lower (95% CI, -5.8 to -1.9 percentage points) among individuals who reviewed or compared coverage options annually than among those who did not. Among individuals with low socioeconomic status, the likelihood of reviewing or comparing coverage options annually was lower for those with Medicare and Medicaid dual eligibility than for those without it (odds ratio, 0.79; 95% CI, 0.63-0.99). Results of this study suggest that higher health insurance literacy-particularly, annual review and comparison of coverage choices-is associated with higher MA enrollment and choice of a particular MA plan. Policy makers should develop programs to encourage frequent review and comparison of coverage options for informed decision making.