An individual who does not have access to employer-sponsored insurance makes a decision about whether to buy non-group health insurance based both on the supply of insurance and the individual’s demand for insurance. Insurance supply includes the types of policies available; and for the policies available, the generosity of benefits, price, and any exclusions. An example of an exclusion is a policy issued to someone with a history of carpal tunnel syndrome stating that the hands and arms are not covered, so any claims related to the hands or arms would be denied. Insurance supply for an individual is largely determined by state level regulations, such as whether the insurance company can medically underwrite policies, in addition to individual characteristics such as health status, medical history, and age.
Demand for health insurance can be expected to vary based on individual and family characteristics such as financial resources, health status, employment status, parenthood status, and attitudes about the value of insurance and towards risk. The price a person would be willing to pay will vary based on characteristics of available policies.

Additional barriers exist to the purchase of non-group health insurance beyond well recognized factors such as financial resources and health status. Knowledge of the value of insurance, and the ability to understand how to purchase it, including ability to navigate the health insurance market place, play roles in purchase decisions. Knowledge of the value of insurance would be expected to increase one’s interest in obtaining insurance, while lack of this knowledge could be a reason for not purchasing. Knowledge of the value of insurance includes understanding how insurance works, and the benefits of obtaining it. In addition to providing benefits, insurance acts as a price discounter for obtaining health services since medical providers typically charge lower rates to those with insurance than those who pay independently. Insurance also provides protection against the risk of incurring high medical bills. If individuals do not understand the advantages of having insurance they may not consider purchasing it or may chose not to purchase it once they are quoted a premium. The argument here is not that some people do not place as much value on insurance as others think they should, but that some people would value insurance differently if they had more comprehensive knowledge about it. Potential barriers to obtaining that knowledge include logical reasoning or intelligence, education level, and English language ability.

Differences in the decision to purchase insurance based on racial and ethnic group status are well documented. In the context of the framework outlined above, ethnic and racial group status impacts the level of health insurance knowledge through education and language, but may also independently play a role through cultural norms and values. For example, racial and ethnic groups may vary in their attitudes towards medical care. If the typical experience when using insurance differs by racial and ethnic group, minorities may be less willing to purchase insurance based on their own past experience or knowledge of the experiences of others. In addition, if demand for medical care varies by racial or ethnic group demand for health insurance would vary as well. Prior research has shown that among those who are insured racial and ethnic minorities are less likely to use medical care (Fiscella et al., 2002). Therefore, any differences in the decision to purchase non-group insurance based on racial and ethnic group status may be due to knowledge, navigation, or cultural norms and values. This study focuses on education level, English language ability, and racial and ethnicity minority group status, as factors that impact the ability to obtain knowledge about insurance, individuals’ actual knowledge level, and ability to navigate the insurance market. This study tests the hypotheses that lower education levels, racial and ethnic minority group status, and limited English language ability are independently associated with a lower probability of purchasing non- group health insurance after controlling for other demographic factors, health status, and attitudes towards insurance and risk.