The Costly, Confusing Medicare Choices Facing 62 Million Americans
October 28, 2021
Photo by Dan Gorenstein
It’s Medicare open enrollment — the one chance each year that all 62 million beneficiaries have to shop for better coverage. But choosing a new plan is much harder and riskier than it seems.
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The Basics: The Medicare Enrollment Maze
Medicare’s annual open enrollment period is an important opportunity for the program’s 62 million beneficiaries to ensure they have the coverage that best suits their medical and financial circumstances. But in a new Kaiser Family Foundation survey, just 29% of beneficiaries reported comparing plans during the 2018 open enrollment period. People with low incomes, less education and who identify as Black or Hispanic were even less likely to shop around for coverage.
Those that do shop are vulnerable to making suboptimal decisions, wasting money and even harming their health. Leaving money on the table can be an especially costly mistake for adults over 65, whose median income is roughly $27,000 per year. Research shows even small financial hardships, like a copay increase of $10, can cause seniors to cut back on important services, such as primary care and life-saving medications.
The Problem: Difficult Decisions
Potential Policy Fixes
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Additional Reporting and Research on Medicare Enrollment:
Seven in Ten Medicare Beneficiaries Did Not Compare Plans During Past Open Enrollment Period (Wyatt Koma, Meredith Freed, Juliette Cubanski and Tricia Neuman; KFF; 10/13/2021)
Mortality Effects and Choice Across Private Health Insurance Plans (Jason Abaluck, Mauricio Caceres Bravo, Peter Hull and Amanda Starc, Quarterly Journal of Economics, 5/6/2021)
The Health Costs of Cost-Sharing (Amitabh Chandra, Evan Flack and Ziad Obermeyer, NBER, 2/2021)
When Medicare Choices Get ‘Pretty Crazy,’ Many Seniors Avert Their Eyes (Mark Miller, New York Times, 11/13/2020)
Research Corner: Picking Plans (Tradeoffs, 10/13/2020)
Why Consumers Often Err in Choosing Health Plans (Austin Frakt, New York Times, 11/1/2015)
Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program (Jason Abaluck and Jonathan Gruber, American Economic Review, 8/18/2011)
Lilyan Grossman, Medicare beneficiary
Tricia Neuman, ScD, Senior Vice President and Executive Director of the Program on Medicare Policy, Kaiser Family Foundation
Amal Trivedi, MD, Professor of Medicine and Health Services, Policy, and Practice, Brown University
The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode by Blue Dot Sessions.
This episode was produced by Leslie Walker and mixed by Andrew Parrella.
Additional thanks to:
Jason Abaluck, Saurabh Bhargava, Sungchul Park, Fred Riccardi, Anna Sinaiko, Jane Sung, the Tradeoffs Advisory Board and our stellar staff!