Understanding Medicare Plan Choice: Costs, Consequences, and Policy Options
The consequences of choosing a health insurance plan with excessive financial costs or insufficient risk protection can be severe, particularly for those on a fixed income. Moreover, a variety of evidence suggests that many consumers choose plans that are not best for them, even selecting clearly dominated plans. To advance consumer welfare in this arena, an understanding of how consumer decision making and Medicare’s structure interact to shape plan choice is critical. To explore these issues, this session will begin by considering determinants of selection into different types of Medicare plan options; progress to work detailing the impact of inertia on expected costs in Medicare Advantage; and, finally, examine the potential for interventions informed by behavioral economics to shift consumers away from defaulting and inertia, and towards lower expected cost plans in Medicare Advantage.