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Ignorance of Obamacare exchanges threatens plan's success

Miguel S. Salmeron | Stockbyte | Getty Images

With just 38 days to go before the opening of Obamacare insurance exchanges, public ignorance about those marketplaces remains sky-high, threatening the very goal of offering affordable health care to the uninsured, several studies show.

And according to a troubling conclusion in at least one study earlier this year, awareness about the new health-care law had declined among some groups more than three years after Obamacare was signed.

But whether knowledge is slipping or stagnantly low, health-care advocates are now in crunch mode as they work to spread the word about exchanges, whose success is dependent on large consumer participation.

Just 22 percent of adults ages 18 to 64 had heard "a lot" or "some" about the insurance exchanges, according to a Kaiser Family Foundation study in June. But 45 percent said they knew "nothing at all about them," according to the study.

Perhaps most alarming is the number of young adults who appear particularly clueless about the Affordable Care Act exchanges that are due to open Oct. 1 and begin coverage on Jan. 1. A whopping 73 percent of adults between the ages of 19 and 29 are unaware of the marketplaces, a separate Commonwealth Fund study this week found.

"If you continue to see that very low level of awareness even as you get toward October, that's a sign that we may not be getting the enrollment, and the exchanges are going to be at a bit of risk from that," said Commonwealth Fund report co- author Sara Collins.

"You want a broad, healthy diverse risk pool in the marketplaces. It's really important that young, healthy people come into the market," said Collins, noting the danger of premium hikes from having a disproportionate number of older, sicker people in insurance plans.

Even if they know about the exchanges, a surprising 68 percent of people with pre-existing health conditions—who potentially have the most to benefit because the law now will bar denial of insurance in such cases—say they are unsure if they will buy the plans there, according to a separate report this month from InsuranceQuotes.com. That same report found that 14 percent of such people with health conditions said they actually would not buy insurance.

(Read more: Health-care changes on the horizon)

Confusion about health insurance

Liz Hamel, an associate director for surveys at the Kaiser Family Foundation, said, "We certainly haven't seen an increase in public knowledge since the law passed" in 2010.

In fact, a Kaiser survey in March found that "awareness had decreased" among some groups about Obamacare, Hamel said.

Since then, there have been news headlines about Obamacare that have left some people with the mistaken impression that the exchanges are either going to be delayed for a year or have been overturned altogether, neither of which is true. Contributing to that confusion are repeated votes by the Republican-controlled House of Representatives to either repeal or defund the law.

(Read more: Another Obamacare delay)

One in Five Have Heard About the Health Insurance Marketplaces

How much have you
heard of health
insurance exchanges
in your state?
Total
public
Insured
Uninsured
Less
than
$40,000
$40,000-
$89,999
$90,000
or more
A lot 8% 10% 4% 7% 7% 11%
Some 14 15 8 13 14 16
Only a little 34 33 32 31 35 35
Nothing at all 45 42 55 49 43 38
Source: kff.org

'Knowledge gap'

"I think it shows that people are really confused. I think it just shows a basic misunderstanding," said Laura Adams, senior analyst at InsuranceQuotes.com. "If these people don't know this law is around the corner and designed to benefit them, then I think that shows a real knowledge gap that I don't think we're going to close before Oct. 1."

"Next year, we're probably going to see a lot of people who could be getting benefits not signing up," Adams said.

The wide knowledge gap has sparked a scramble to educate the uninsured about the exchanges and to push them to sign up during the six-month open enrollment.

"We've definitely got our work cut out for us," said Jessica Barba Brown, national communications director of Enroll America, a nonprofit group that's spending tens of millions of dollars and deploying more than 3,000 volunteers to spread the word about the exchanges.

"This is going to be a huge, unprecedented option for millions and millions of Americans that never had it before," said Barba Brown. "So yeah, it's a big deal, and it's definitely not going to be easy."

What's an insurance exchange?

The government-run exchanges being set up in all 50 states and the District of Columbia will offer a menu of health insurance plans that all must have certain minimum benefits and be affordable. The plans will be offered at different levels of premiums—ranging from bronze plans up to platinum plans—and subsidies will be available to many people to help them pay for the coverage.

Most Americans, about 80 percent, already have insurance through their employers. But for 50 million or so other people, the exchanges will be their primary way of obtaining insurance, which is required by the Affordable Care Act.

Making the job of selling the brand-new exchanges even more difficult is the public's general ignorance about health insurance. A recent Journal of Health Economics study found that just 14 percent of people were able to correctly define all of four insurance terms that could affect plan-buying decisions: deductibles, copays, coinsurance and maximum out of pocket costs.

But the persistent ignorance about the Obamacare exchanges is striking given extensive news coverage of the health-reform law upheld by the Supreme Court last year as well as a presidential election, which was seen as a referendum on President Barack Obama's championing of the legislation.

(Read more: Obamacare penalty)

The risk of ignorance about the exchanges isn't limited to potential premium hikes stemming from lower-than-projected enrollment.

There are also "some dramatic consequences" for the health of the people who don't obtain insurance, said Jeffrey Levi, executive director of the Trust for America's Health, a health advocacy group.

"For example, there are estimates that as much as a quarter of people that are HIV-positive do not know they are infected," said Levi, noting that if those people had insurance coverage they would be getting "routine screening" that could detect the virus.

"This is not just preventing the people with HIV from developing AIDS, but we also know that people in treatment are much less likely to transmit the disease."

New York State of Health

Like other states, New York is launching a multifront effort to overcome lack of awareness about exchanges and get people to enroll.

Donna Frescatore, director of New York's exchange, said this week's roll out of its official name, "New York State of Health," a tax credit calculator on the marketplace's website and the release of information about the insurance plans being offered in each county were "a big step" in raising awareness.

New York, which has received nearly $41 million in federal funds to market the exchange over two years, also launched a social media campaign on Wednesday, targeting potential exchange users on Facebook, Twitter and Google, popular platforms for younger people, Frescatore noted.

New York State of Health in late September will begin TV, print and radio advertising promoting the exchanges. It's also partnering with about 150 organizations and subcontractors including YMCAs and faith-based groups to bolster enrollment and spread the word.

Frescatore said the average 53-percent reductions in the exchange's plans premium rates over current rates that were announced last month "are largely built" on assumptions that 1.1 million people will enroll in the next three years.

"We're optimistic that will happen," Frescatore said. "That's what makes this outreach so critical."

(Read more: Don't fall off the Obamacare subsidy 'cliff')

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan.

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