Health-Insurance Forms Also Need Reform

Insurance jargon confuses an already stressful process. Companies are trying to switch to simpler language, where "formulary" becomes "drug list"

By Zoe Galland

The current public clamor over health-care reform is drowning out a basic problem that many Americans have: understanding their insurance policies.

In an August editorial for The New York Times (NYT), John Aloysius Cogan Jr., the executive counsel for the Rhode Island Office of the Health Insurance Commissioner, discussed the need for clearly written health-care policies. "It is hard to believe that very many of the 200 million Americans who have private health insurance understand their own coverage," Cogan wrote. Rhode Island, he continued, soon will require that all insurance policies are written at the average reading level of Rhode Islanders—eighth grade. (The average American reads at a seventh-grade level.)

"I don't know what the insurance companies are thinking when they write these policies," Cogan says in an interview with BusinessWeek. "My suspicion is that most of them are not [being confusing] intentionally. I would like to think that they're not doing this purposefully."

New Mandates and Options

Susan McKay, a spokeswoman for the advocacy group Tennessee Health Care Campaign, says clearer language is needed—both from insurers and in the health-care reform bills currently being debated in Congress. That legislation, if it passes, is likely to result in reams of new mandates and options that insurance suppliers, employers, and regulators will have to boil down for laypeople. "The health-insurance industry must be transparent and really specific about what they are going to cover, what their premiums are, what they're going to expect in co-pays, and what the deductible is," McKay says. "Why do they have to try to be so obscure in the language they use?"

Jargon may not be the worst thing insurance companies are accused of inflicting upon their members. But some insurance companies recently have made serious efforts to reduce the number of jargon-laced insurance forms that Americans must sift through. Aetna (AET) published a manual in 2008 called Navigating Your Health Benefits for Dummies. ASI, the for-profit arm of the AARP, is working on efforts to "better communicate" Medicare insurance plans—in 2010, ASI and UnitedHealth Group (UNH) will introduce a clearer, easier-to-comprehend explanation of benefits as well as a remodeled certificate of insurance. And Cigna (CI) has released new guidelines for its customer service representatives.

"We're trying to get people engaged in learning about health," says Sheila McCormick, director for consumer education at Cigna's Chicago office. Cigna's 26,000 employees have been ordered to stop using jargon and use simpler words to help consumers understand their policies.

Instead of the term "formulary," for example, Cigna's people must say "drug list." Instead of "patient liability," they must say "your responsibility." Instead of "carry-over funds," they must say "last year's unused funds," or "money left in your account from last year." And when employees talk to customers about their "deductible," they must include a definition of the word when first referring to it.

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