The large variety of managed care plans offered by the Medicare Advantage program may be counter-productive for beneficiaries, particularly those with low cognitive ability, according to a new study from Harvard Medical School and published online in Health Affairs.
Elderly patients often make poor decisions—or no decisions at all—when faced with an overwhelming number of complex insurance choices, researchers said. Ironically, those with impaired cognition may benefit most from the more generous coverage often offered by Medicare Advantage plans.
“We are providing the most complex insurance choices to the very population that is least equipped to make these high-stakes decisions,” said J. Michael McWilliams, assistant professor of health care policy and medicine at Harvard Medical School. “Most other Americans choose from just a few health plans, but elderly Medicare beneficiaries often have to sift through dozens of options.”
The Medicare Modernization Act of 2003 initiated a series of payment increases to the Medicare Advantage program. These payment hikes increased the number of private plans participating in the program and encouraged plans to compete for enrollees by offering lower premiums and more generous benefits, such as prescription drug coverage.
The researchers looked at 21,815 enrollment decisions from 2004 to 2007 made by 6,672 participants in a national longitudinal survey and compared enrollment decisions between participants with different cognition levels and different plan offerings in their area.
On average, an increase in the number of plans was associated with increased Medicare Advantage enrollment, provided the number of available plan options was fewer than 15, according to the study. When the number of options surpassed 30, as it did in 25 percent of U.S. counties, such increases were actually associated with decreased enrollment.
Beneficiaries with low cognitive function were substantially less likely than their peers with high cognitive function to appreciate the advantages offered by these plans, choosing to remain in the traditional Medicare program instead.
The authors suggest the reason for lower enrollment could be that beneficiaries became overwhelmed and chose traditional Medicare by default. Elderly Medicare beneficiaries with limited cognitive abilities may also have difficulty identifying the most valuable option from a complex set of Medicare alternatives.
These findings may also have policy implications, researchers said, as health insurance exchanges are to be established under the Affordable Care Act. Researchers argued that these exchanges could be helpful to seniors and the Medicare program if expanded to handle enrollment in Medicare Advantage plans.