CLINICAL RESEARCH STUDY The impact of low health literacy on the medical costs of Medicare managed care enrollees David H. Howard, PhD, a Julie Gazmararian, MPH, PhD, b Ruth M. Parker, MD c a Department of Health Policy and Management, b Emory Center on Health Outcomes and Quality, Rollins School of Public Health, and c Department of Medicine, Emory University School of Medicine, Emory University. ABSTRACT PURPOSE: To examine the impact of low health literacy on medical care use and costs. METHODS: The study sample consisted of 3260 noninstitutionalized elderly persons enrolling in a Medicare managed care plan in 1997 in Cleveland, Ohio; Houston, Texas; South Florida; and Tampa, Florida. Health literacy—the degree to which individuals have the capacity to obtain, process, and understand basic health information and services needed to make appropriate health decisions—was measured using the Short Test of Functional Health Literacy in Adults. We used a 2-part regression model to examine the association between health literacy and medical costs, adjusting for age, sex, race/ethnicity, education, income, alcohol and tobacco consumption, and comorbid conditions. Results are presented as mean differences (with 95% confidence intervals [CI]) between the inadequate and adequate groups and, separately, the marginal and adequate groups. RESULTS: When compared to those with adequate health literacy, emergency room costs were significantly higher ($108; 95% CI: $62 to $154; P 0.0001) among those with inadequate health literacy, while differences in total ($1551; 95% CI: -$166 to $3267; P = 0.08) and inpatient ($1543; 95% CI: -$89 to $3175; P = 0.06) costs were marginally significant. Total costs were higher in the marginal health literacy group, but the difference was not significant ($596; 95% CI: -$1437 to $2630; P = 0.57). CONCLUSIONS: Persons with inadequate health literacy incur higher medical costs and use an inefficient mix of services. © 2005 Elsevier Inc. All rights reserved. KEYWORDS: Cost; Cost analysis; Health expenditures; Health knowledge; Patient education Research on “health literacy”—the degree to which in- dividuals have the capacity to obtain, process, and under- stand basic health information and services needed to make appropriate health decisions 1,2 — has gained momentum over the last 5 years. 1,3 Health literacy was recently added to the nation’s Healthy People 2010 objectives 2 and listed, along with self-management, as one of 20 priority areas in which quality improvement could transform health care in America. 4 In addition, the Institute of Medicine recently released a report that calls attention to the negative conse- quences of low health literacy for patients and the health system. 5 About one-half of the adult U.S. population has low functional literacy skills, 6 meaning that they lack the liter- acy skills needed for full participation in American society. 7 Although there are no reliable population-based estimates of health literacy, surveys in narrow subpopulations suggest that at least one-third of adults in the United States lack This work was supported by an unrestricted grant from Pfizer. Requests for reprints should be addressed to David H. Howard, PhD, 1518 Clifton Road, NE, Atlanta, GA 30322. E-mail address: dhhowar@emory.edu. 0002-9343/$ -see front matter © 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.amjmed.2005.01.010 The American Journal of Medicine (2005) 118, 371-377