The health care system

How health insurance impacts care and why health insurance literacy is important

The reality is that health insurance is the primary financing mechanism in our health care system, and it is directly related to the services that we are able to provide and the care patients are able to obtain.


One thing that we may all be able to generally agree on is that our health care and health insurance systems are increasingly complex. Unfortunately, health insurance has consistently been an obstacle for numerous patients, yet there has been little research evaluating what exactly patients or physicians understand on the topic.

You may be asking: Why is it important for physicians to even understand health insurance concepts? The reality is that health insurance is the primary financing mechanism in our health care system, and it is directly related to the services that we are able to provide and the care patients are able to obtain.

The medical students of today are the hospital administrators and department chairs of tomorrow. They will be the ones directly administering care, or in charge of the large-scale distribution of services. Similarly, future physicians will likely be in a position at some point in their career where they may be asked to explain various insurance concepts to their patients.

Patients may have questions regarding why they owe money for office visits or how much procedures may cost them. Additionally, a thorough comprehension of health insurance may influence a physician’s choice in ordering tests or treatments. A lack in understanding health insurance topics could lead to inefficient administration of care or potentially prevent medical providers from thoroughly understanding the cost or insurance-related barriers that patients may face.

Understanding health insurance literacy

When discussing health insurance knowledge, an important first step is the concept of health insurance literacy (HIL), which is defined as “the degree to which individuals have the knowledge, ability and confidence to find and evaluate information about health plans, select the best plans for their own financial and health circumstances and use the plan once enrolled.” HIL is essentially an individual’s ability to both comprehend their health insurance plan and make informed decisions regarding their health care.

When assessed in various patient populations, it has been shown that higher levels of health insurance literacy are directly associated with more efficient use of health care services. Patients with poor HIL have been found to be more likely to delay or even completely forgo care. Additionally, when patients have lower HIL, they are less likely to use preventive services and more likely to frequent the emergency department for care. While HIL has been shown to impact patient care, it is a metric that is rarely assessed in medical students or practicing physicians.

Research has shown that a large percentage of medical students are unaware that health care costs per person in the U.S. are the highest in the world and many students underestimate the number of patients who are uninsured. For the past 30 years, students have been asked to complete the Medical Student Graduation Questionnaire, which evaluates their views on their medical education. Medical students have consistently reported that they did not believe their health policy or health insurance education was adequate.

When some medical students have been surveyed regarding their understanding of insurance or policy topics, such as Medicaid or the Affordable Care Act (ACA), they had limited knowledge of either. It was seen that only 17% were aware of the specific Medicaid eligibility requirements in their states, and 38% were unsure if their states had expanded Medicare.

Shortly after the ACA was passed, medical students were surveyed regarding their understanding of this monumental legislation, which significantly impacted the health care system. A majority of students did not have any basic understanding of the law, while an even larger portion of those students did not have any opinion of it. While the primary objective of our medical school education is to mold medical students into thoroughly trained diagnosticians, any failure to discuss vital health care system concepts will lead to physicians who lack an understanding of the inner workings of the system they will be working within.

Health insurance discussions should start in med school

Health policy or health insurance topics have rarely been a major focus of medical school curriculums. This was most significantly seen when medical school deans were surveyed about the extent of health policy education at their institutions. It was seen that on average, health policy, of which health insurance topics were included, only comprised roughly 14 lecture hours over the entire four-year curriculum.

At the time of the study, only a quarter of medical schools had developed health policy courses for their students. It was indicated that these topics were infrequently taught mainly due to a lack of faculty with related expertise. Yet most deans indicated that health insurance was one of the most important topics for students to understand. Some medical schools throughout the country have begun to fill the health policy, health reform and health economics gap by implementing “health systems science” courses that focus on the “principles, methods and practices of improving quality, outcomes and costs of health care delivery for patients.”

Across each of the medical schools that have implemented these courses, the primary reason has been the belief that students do not understand how the health care system actually functions. These medical schools believe that well-rounded student physicians will be better equipped to overcome the inadequacies of our health care system.

Focusing on gaining understanding

Due to medical students’ potentially limited understanding of the uses or implications of health insurance and its relationship in how their patients interact with the health care system, it is a topic we should continue to focus on. If medical students are better able to understand the role health insurance plays in the medical system, it will allow them to better handle the cost or access barriers their patients may face when seeking care. This is compounded by the reality that physicians are frequently tasked with counseling patients and offering advice that is vital in how each patient interacts with the health care system.

A poor understanding of health insurance may prevent students from being fully prepared to offer their patients accurate and beneficial health insurance guidance. Medical students will become physicians and be tasked with working within the confines of a system that they have a limited understanding of. Having a thorough understanding of the mechanisms that fund the services they are providing is essential to providing efficient and effective care.

If a physician lacks true understanding of the relationship between insurance and care, then it may lead to services being provided that are helpful in the short term, but may lead to significant bills, stress or debt long-term. Our goal should be for physicians to not only focus on cost, but also to understand financial hardships related to health insurance through their patients’ perspective. We need to develop cost-conscious physicians who efficiently provide care that will benefit patients and reduce overall health care costs.

Editor’s note: The views expressed in this article are the author’s own and do not necessarily represent the views of The DO or the AOA.

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  1. DO

    Unfortunately, there is no answer that is logistically possible.

    If health insurance was “free” or if the US changed to Universal coverage for all, what do we do with those who dont take care of themselves?
    I’m sure we can find statistics that will support that the homeless, people who have substance abuse issues, and the list goes on and on; account for a disproportionate amount of health care dollars.

    If we factor in the cost of health care dollars on end of life care in futile situations, I would expect again, a disproportionate amount of health care dollars being spent.

    If we go with Universal care for all, I hope the masses will understand, there will be some guidelines or panels that are followed to ensure all can be covered dollar wise.

    Is the majority of people going to be OK to be told what they can or can not receive in regard to health care?

    And this does not even touch upon the cost of defensive medicine.
    Good luck trying to influence or change the mentality of lawyers.

    1. MS4

      I don’t think that this article is defending universal healthcare coverage by any means; rather, it is stressing the importance of providers having a better understanding of the role that health insurance plays in their ability to provide care. The reality is that health insurance fundamentally impacts which services can be provided or discussed with patients; additionally, it directly impacts how providers see their patients. I think the point that this article is trying to make is that we should be providing medical students with every possible tool to be successful in the future; when they are directly treating patients. Not teaching medical students about this important topic is essentially like pushing them into the healthcare system with one hand tied behind their back, and does not allow them to fully understand the system that they are working within.

      1. DR

        NO doubt that todays medical students and young Drs have no idea about the business of medicine and understanding who is the payor for any service.

        All someone has to do is look at the Physician Community on FB by this Dr Nisha.

        Many posts are about how can I fire this patient, or the patient was rude to me and so on.
        The business of seeing and treating patients is to have a day filled with patients and educating your staff on how the system works.

        DPC is an option for only a small percentage of patients who are exceedingly wealthy and dont mind paying extra for what is already covered by the insurance they picked.

        We are in for trouble with the upcoming future of young Physicians.

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