Fwd: qotd: Important! Over 90 percent fail choose the right Part D plan

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-------- Original Message --------
Subject: qotd: Important! Over 90 percent fail choose the right Part D plan
Date: Wed, 26 Sep 2012 10:58:55 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The National Bureau of Economic Research
June 2012
Plan Selection in Medicare Part D: Evidence from Administrative Data
By Florian Heiss, Adam Leive, Daniel McFadden, Joachim Winter

From the NBER Digest:

Fewer than 10 percent of individuals enroll in what for them would be
the most cost-effective plans.

In Plan Selection in Medicare Part D: Evidence from Administrative Data
(NBER Working Paper No. 18166), co-authors Florian Heiss, Adam Leive,
Daniel McFadden, and Joachim Winter analyze data on medical claims in
Medicare Part D drug insurance programs. They find that fewer than 10
percent of individuals enroll in what for them would be the most
cost-effective plans. This is apparently because seniors pay more
attention to their out-of-pocket premiums than to the overall benefits
of the dozens of drug plans available to them. Equally significant, the
researchers believe that how seniors decide whether to enroll in
Medicare Part D, and what plans they select, is important not only for
management of the Part D program, but also is indicative of how
consumers behave in real-world decision situations with a complex,
ambiguous structure and high stakes. The researchers add that their
findings may yield predictions for how seniors will handle plan choices
in the new general health insurance exchanges that will implement the
Patient Protection and Affordable Care Act of 2010.

http://www.nber.org/digest/oct12/w18166.html

NBER Working Paper No. 18166 (47 pages):
http://www.nber.org/papers/w18166.pdf


Comment: If over 90 percent of purchasers of the Medicare Part D drug
plans fail to choose the plans that are best for themselves, then how
could we ever expect them to make wise decisions in selecting the best
plans from the much more complex plans of the state health insurance
exchanges, or, for that matter, from the choice of Medicare Advantage
plans or the plan choices to be offered in the proposed premium support
(voucher) markets?

The last sentence from "Conclusions" in their paper: "Our results then
do not support the proposition that consumers can make and benefit from
good choices in private health insurance markets, and direct health care
resources to their best use."

This is really important. Inserting very expensive, profoundly wasteful
insurer administrative intermediaries into the system under the guise of
choice - choices that cannot be made on a rational basis, choices that
are all worse than a single, comprehensive publicly-administered plan
would be - is the ultimate of reckless decisions made by the policy
community and the politicians that they work for.

Let's improve Medicare by eliminating the Part D and Medicare Advantage
intermediaries and folding an improved version of those benefits into
the traditional Medicare program, and then provide it to everyone. It
would be cheaper overall and would open up our choices to the choices we
really want - that of our health care professionals and institutions.
That would be far better than this nonsense of choosing from all the
wrong choices.