Examining Antecedents of Health Insurance Literacy: The Role of Locus of Control, Cognitive Style, and Financial Knowledge

Abstract

Today's consumer is expected to make health‐care decisions that have serious implications for their welfare. However, a major barrier to these decisions is a basic lack of understanding of health insurance. A critical first step is to examine drivers of health insurance literacy and in turn offer interventions that can have a positive impact on consumer welfare. This article explores the relationship between relevant consumer psychographics, financial knowledge, and demographics with health insurance literacy. Results indicate that while demographics play a role, the degree to which consumers believe a situation or event is under their own control (i.e., locus of control), how they process information (i.e., cognitive style), and consumer's financial confidence (i.e., subjective knowledge) is a critical indicator of their health insurance literacy. Cluster analysis reveals three “faces” of health insurance literacy.