Benefits and Costs of Health Insurance Choice among Older Adults: The Case of Medicare Prescription Drug Plans

The perceptions of policy makers regarding the ability and desire of Medicare beneficiaries to make choices regarding their health insurance coverage has shaped the development of the Medicare program in fundamental, yet sometimes contradictory, ways. Yet relatively little is known about the factors that affect the decision making of older adults in this context. Nevertheless, this information is necessary to evaluate the effectiveness of policies that rely on choice among competing health insurance plans to reduce the cost and improve the quality of health care covered by the Medicare program. In this pilot project, the investigators had three objectives. The first was to gain a better understanding of how the number of alternatives, the number of attributes of potential alternatives, and the interaction of the two affects satisfaction with choice among Medicare beneficiaries. The second was to develop a measure of the efficacy of choice in this context. The final objective was to understand how satisfaction with choice among beneficiaries is related to the value individuals obtain from greater product differentiation in health insurance markets.

This study is a seed project for the Center on Advancing Decision Making for Aging.