When is the last time you took a good, hard look at your health insurance options? Do you know what changes were made to your plan last year?

If the answer is “no,” you are not alone.

According to a new study by Maria Polyakova, assistant professor of health research and policy and Stanford Health Policy core faculty member, most Medicare Part D enrollees do not change their plans from year to year — even though plans can change drastically.

The study, recently published in the American Economic Journal: Applied, asserts that nudging consumers to re-evaluate their coverage could save them around $500 per year in out of pocket spending and premiums.

What is Medicare Part D?

Implemented in 2006, Part D allows Medicare users to purchase prescription drug coverage. Plans are administered by private insurance companies, but are heavily subsidized and regulated by the federal government. Consumers choose from more than 30 plans in their home state and are able to switch during a yearly open-enrollment period.

About 40 million people in the United States are enrolled in a Part D plan.

But Polyakova finds that “people do not seem to be switching contracts very often. At the same time, the contracts are changing quite dramatically every year.”

Though the study does not examine why consumers failed to switch, the data suggests that changing plans can be costly. Not necessarily a financial cost, but likely one of time or energy.

Thoroughly examining more than 30 plans on a yearly basis can be a burden, and changes are not always easy to detect.

“There are many other features of Part D plans that may change, so even if premiums appear the same, insurers may have changed other parts of coverage, such as deductible levels, co-pays and co-insurance, as well as which drugs are included,” said Polyakova.

Because the Part D market as a whole is dynamic, consumers can lose money even when their plan is stable.

“Even if your specific plan doesn’t change much, it is possible that it is not the best plan anymore because other plans change.”

Consumers tend to stick with the plan they picked when they first signed up. As a result, the study observes that individuals with similar needs may find themselves enrolled in very different plans if they made their first enrollment choices in different years.

This suggests that while most people likely try to pick the best coverage initially, they do not tend to re-evaluate their coverage each year in a way that fits their needs.

How can we improve coverage choices?

Polyakova believes that if the U.S. government were to more actively remind people to re-examine their plans during open enrollment, they could save consumers 20 to 30 percent.

Some researchers worry that improving individual choices and encouraging consumers to update their coverage could negatively affect the insurance market through “adverse selection.”

For example, individuals who are fairly healthy might tend to choose less generous plans than those who are relatively sick. If all those in poorer health end up in one plan, and there are no relatively low-spending enrollees to counteract the risk, the generous plan can become unsustainable.

However, the study finds evidence suggesting that for Part D, reminders to re-examine plans are unlikely to cause issues from adverse selection.

The federal government has implemented risk adjustment policies, or ways to combat the negative effects of adverse selection, that work to keep the market from unraveling. The government provides higher subsidies for sicker patients, pays the majority of patient costs and caps insurers’ profits and losses.

“From the point of view of the government, it seems that it is worthwhile to remind people who are already enrolled to reconsider their choices and potentially explain the differences across plans,” said Polyakova.

As the Affordable Care Act (ACA) changes coverage for Part D plans, reminding enrollees to re-examine their choices will become even more important. The ACA will substantially increase coverage, and plans could change considerably as a result.

What does this mean for the health insurance market?

While the study focuses specifically on Medicare Part D, Polyakova believes these findings likely translate to other areas of health insurance, particularly coverage under the ACA, which has many similar policies.

“The idea that we should remind consumers to re-evaluate plans has already been quite influential in the ACA policy debate,” said Polyakova. “Policymakers are tracking whether consumers are switching plans from one year to the next.”

She argues that in a consumer-driven economy, people must be able to easily make choices between products, in this case health insurance plans, for the market to function. But because choosing takes so much time and plan features are not always transparent, the forces driving the market may become weak.

Educating people about the financial benefits of switching plans could help the insurance market get back on track.

“People should try to reconsider their health risk and their insurance choices during every enrollment period,” Polyakova said. “Because if they don’t, it could have serious financial implications.”

The Asia Health Policy Program at Stanford’s Shorenstein Asia-Pacific Research Center, in collaboration with scholars from Stanford Health Policy's Center on Demography and Economics of Health and Aging, the Stanford Institute for Economic Policy Research, and the Next World Program, is soliciting papers for the third annual workshop on the economics of ageing titled Financing Longevity: The Economics of Pensions, Health Insurance, Long-term Care and Disability Insurance held at Stanford from April 24-25, 2017, and for a related special issue of the Journal of the Economics of Ageing.

The triumph of longevity can pose a challenge to the fiscal integrity of public and private pension systems and other social support programs disproportionately used by older adults. High-income countries offer lessons – frequently cautionary tales – for low- and middle-income countries about how to design social protection programs to be sustainable in the face of population ageing. Technological change and income inequality interact with population ageing to threaten the sustainability and perceived fairness of conventional financing for many social programs. Promoting longer working lives and savings for retirement are obvious policy priorities; but in many cases the fiscal challenges are even more acute for other social programs, such as insurance systems for medical care, long-term care, and disability. Reform of entitlement programs is also often politically difficult, further highlighting how important it is for developing countries putting in place comprehensive social security systems to take account of the macroeconomic implications of population ageing.

The objective of the workshop is to explore the economics of ageing from the perspective of sustainable financing for longer lives. The workshop will bring together researchers to present recent empirical and theoretical research on the economics of ageing with special (yet not exclusive) foci on the following topics:

• Public and private roles in savings and retirement security
• Living and working in an Age of Longevity: Lessons for Finance
• Defined benefit, defined contribution, and innovations in design of pension programs
• Intergenerational and equity implications of different financing mechanisms for pensions and social insurance
• The impact of population aging on health insurance financing
• Economic incentives of long-term care insurance and disability insurance systems
• Precautionary savings and social protection system generosity
• Elderly cognitive function and financial planning
• Evaluation of policies aimed at increasing health and productivity of older adults
• Population ageing and financing economic growth
• Tax policies’ implications for capital deepening and investment in human capital
• The relationship between population age structure and capital market returns
• Evidence on policies designed to address disparities – gender, ethnic/racial, inter-regional, urban/rural – in old-age support
• The political economy of reforming pension systems as well as health, long-term care and disability insurance programs

Submission for the workshop

Interested authors are invited to submit a 1-page abstract by Sept. 30, 2016, to Karen Eggleston at karene@stanford.edu. The authors of accepted abstracts will be notified by Oct. 15, 2016, and completed draft papers will be expected by April 1, 2017.

Economy-class travel and accommodation costs for one author of each accepted paper will be covered by the organizers.

Invited authors are expected to submit their paper to the Journal of the Economics of Ageing. A selection of these papers will (assuming successful completion of the review process) be published in a special issue.

Submission to the special issue

Authors (also those interested who are not attending the workshop) are invited to submit papers for the special issue in the Journal of the Economics of Ageing by Aug. 1, 2017. Submissions should be made online. Please select article type “SI Financing Longevity.”

About the Next World Program

The Next World Program is a joint initiative of Harvard University’s Program on the Global Demography of Aging, the WDA Forum, Stanford’s Asia Health Policy Program, and Fudan University’s Working Group on Comparative Ageing Societies. These institutions organize an annual workshop and a special issue in the Journal of the Economics of Ageing on an important economic theme related to ageing societies.

More information can be found in the PDF below.

Colorectal cancer is the second leading cause of death from cancer in the United States, after lung cancer, yet many Americans are still loathe to be screened for the disease.

The U.S. Preventive Services Task Force strongly recommended adults ages 50 to 75 to be screened for colon cancer and suggested adults 76 to 85  make individual decisions about whether to be screened, depending on their overall health and prior screening history. The recommendation and several accompanying editorials were published Wednesay in the Journal of the American Medical Association (JAMA).

The independent body of national experts in prevention and evidence-based medicine emphasized colonoscopy is not the only valid test out there. There are multiple screening options available to the one-third of Americans over 50 who have never been screened.

We pose five key questions about the Task Force recommendations to Douglas K. Owens, the Henry J. Kaiser, Jr., Professor of Medicine at Stanford and director of the Center for Health Policy and Center for Primary Care and Outcomes Research. He is an author of the recommendation and was a member of the Task Force when the guidelines were developed.

What is the most significant finding of this final recommendation?

Colorectal cancer is the second leading cause of death from cancer in the United States. The good news is that evidence convincingly shows screening for colorectal cancer works. The Task Force strongly recommends screening adults 50 to 75 for colorectal cancer, as it reduces the risk of dying from the disease. Unfortunately, one-third of people 50 to 75 have never been screened, so we are missing an important opportunity to prevent deaths from colorectal cancer.

There are multiple screening options for colorectal cancer. What are they and how should individuals decide which is best for them?

What really matters is that people get screened. There are several options that are effective, so we recommend that people discuss the options with their clinician. There are direct visualization tests, like colonoscopy, and stool-based tests, like fecal immunochemical testing (FIT). Each test has different strengths and limitations, and people may prefer one approach over another. For example, colonoscopy can be done every 10 years, but FIT testing should be done every year. But the real message is, choose an approach in consultation with your clinician and get screened.

The Task Force found that once adults reach 76 years old, the benefits of screening become smaller and the potential for harm is greater. Why is this and how should older Americans determine which test is best for them?

We recommend individual decision making for patients 76 to 85. The benefits are smaller because a person’s chance of dying of other causes goes up as they get older. The harms are still small but increase with age, primarily because the risks of the potential complications of colonoscopy (bleeding, perforation, and infection) go up with age. Still, some people in this age group will benefit from screening. People most likely to benefit are those who have not been screened before, people who are healthy enough to undergo treatment for CRC should it be found, and people who do not have other diseases or conditions that limit their life expectancy substantially.

Owens explains the Task Force's recommendations to JAMA

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JAMA Network | JAMA | USPSTF Recommendation Statement: Screening for Colorectal Cancer

African-Americans have the highest incidence of and mortality rates from colorectal cancer among all racial and ethnic subgroups. Why are African-Americans more susceptible and does this mean that the screening recommendations differ for them?

The Task Force recognizes the burden that colorectal cancer has on African-Americans, who are at higher risk of being diagnosed with and dying from the disease than other racial/ethnic subgroups. We don’t know why this is — more research is needed in this area. The Task Force did not find enough evidence to conclusively support that making a different recommendation specific to African-Americans would result in a greater net benefit for this population. So our recommendations are intended to apply to all racial/ethnic groups. More robust efforts are needed to ensure that at-risk populations actually receive the screening tests and the follow-up treatments or interventions they need, as people are dying unnecessarily from this disease.

What data did the Task Force use to come to its conclusions?

The Task Force commissioned a comprehensive systematic review of the available evidence on the benefits and harms of colorectal cancer screening. The Task Force also commissioned a modeling study from the Cancer Intervention and Surveillance Modeling Network (CISNET) to help it better understand different screening strategies, such as the optimal age to start or stop screening, and the length of time between screenings. The evidence is convincing that screening reduces the risk of dying from colorectal cancer.

Stanford University's Asian Liver Center (ALC) and the Global Business Group on Health jointly hosted the inaugural JoinJade for China Summit and Awards Ceremony at SCPKU on April 22, 2016.  29 major employers committed to a hepatitis B discrimination-free work environment were recognized at the event.  Lenovo, General Electric and IBM also participated in an employer panel to discuss key strategies for a discrimination-free work environment and next steps.

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JoinJade for China is a joint initiative involving global organizations including the ALC in the U.S. and China, Global Business Group on Health, IBM, General Electric, Intel, Hewlett Packard Enterprise, and HP Inc.  The initiative focuses on building fully inclusive workplaces free from hepatitis B discrimination.  

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The ALC at Stanford University is the first non-profit organization in the U.S. that addresses the disproportionately high rates of chronic hepatitis B infection and liver cancer in Asians and Asian Americans.  Founded in 1996, the center addresses the gap in the fight against hepatitis B through a four-pronged approach of collaboration, advocacy, research, and education and outreach (CARE).  The ultimate goal of the ALC is to eliminate the transmission and stigma of hepatitis B and reduce deaths from liver cancer and liver disease caused by chronic hepatitis B.

Photos courtesy of Stanford University's Asian Liver Center