Aditi Sen is an assistant professor in Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health. Her research focuses on the potential of innovative payment and delivery models, as well as insurance design, to improve the value of health care.

Does which health insurance plan you enroll in matter for your mortality? Answering this question is tricky. If members of Plan A have a higher mortality rate than those in Plan B, that could be caused by differences in the plans, like which drugs they cover. But it could also be caused by differences in the health of people enrolled in each plan. So it caught my eye when a recent NBER working paper by Jason Abaluck, Mauricio M. Caceres Bravo, Peter Hull and Amanda Starc claimed that, “Moving beneficiaries out of the bottom 5% of plans could save tens of thousands of elderly lives each year.” 

The authors looked at Medicare Advantage (MA) plans (Medicare plans run by private insurers instead of the federal government) and observed substantial variation in mortality rates across plans offered in the same geographic area. They then used a number of careful statistical methods — including adjusting for enrollee demographics and looking at what happens when especially low- or high-mortality plans exit the market, forcing people to switch to more typical plans — to determine the drivers of that variation. They ultimately demonstrated convincing evidence that a big chunk of the variation in mortality is, in fact, due to differences in the plans themselves, as opposed to enrollee characteristics. Therefore, if enrollees in low-quality plans were reassigned to higher quality plans, mortality would decrease.

As far as how plans deliver better mortality rates, the authors found that plans with higher premiums, more generous prescription drug coverage, and higher plan spending tend to have lower mortality. But those factors only explain a small portion of the mortality differences, suggesting that harder-to-measure variables — like provider networks — likely play a large role.

Finally, the authors explored whether consumers are more likely to enroll in plans with better mortality rates. Turns out, they aren’t — likely because consumers have no way of knowing this information. MA does include a quality rating (on a scale of 1 to 5 stars) in the plan information shown to potential enrollees. However, this paper also found that a plan’s star rating is not correlated with its mortality rate, meaning the former does not predict the latter.

Because MA is a federal program, there are levers the government has to potentially improve it directly, such as releasing mortality data or updating star ratings to reflect this information in some way. More broadly, the finding that health plans can impact mortality is an important one for insurers, policymakers and patients to consider. This paper motivates further examination of the choices that insurers make in designing plans and that consumers make in picking among them — in Medicare Advantage and beyond.