Do Seniors Have Too Many Medicare Plans To Choose From?

Most seniors face a dizzying array of options each year when it comes time to choose a Medicare health or prescription drug plan. Beneficiaries can select from an average of 18 health plans and 31 prescription drug plans. In South Florida, they have 88 plan choices altogether.

While choice may sound like a good thing, many seniors say they find it difficult to compare plans. As  a result, they often stick with the same plan even if it is not best suited to them, according to a new report from the Kaiser Family Foundation based on conversations with beneficiaries in Memphis, Tennessee; Tampa, Florida; Baltimore; and Seattle. (Kaiser Health News is an editorially independent program of the foundation.)

Many seniors said they did not want to switch plans because the process was so frustrating, the report said. That can cost them money because companies change prices and benefits almost every year.

At a briefing on the report Tuesday, Barry Schwartz, a psychology professor at Swarthmore College and author of the book, “Paradox of Choice,” explained that older people tend to make choices that are “good enough,” while younger people often search for the “perfect” choice.

But Judith Stein, executive director of the Center for Medicare Advocacy, a consumer advocacy group, said that Medicare beneficiaries sometimes find that a health plan that is “good enough” when they are healthy does not meet their needs when they are sick. That’s because a plan may not include coverage for the hospital or doctor they want, or may charge too much for the drug their doctor recommends.

Even with so many choices, most seniors flock to a small number of plans, said Joshua Raskin, senior analyst for investment firm Barclays Capital. He said plans with the most market share, including those run by insurer giants, Humana and UnitedHealthcare, have grown the fastest in recent years.

To give seniors tools to help them choose the best plans, the federal government several years ago began rating them based on factors such as access to doctors and customer service. But seniors seem to pay little attention. In recent years, the best-rated health plans, those with five stars, have increased enrollment at the slowest pace, compared to 8 percent in the market overall, Raskin said.

He said the fastest growing plans are those with three stars — which have seen 12 percent enrollment growth,

He said the fastest-growing plans have been those with just three stars — many of which have seen 12 percent enrollment growth. He added that price,  particularly monthly premiums, often drive seniors’ choices.

But one reason why seniors have not flocked to the best-rated plans may be because there are so few of them. For 2014, the Centers for Medicare and Medicaid Services awarded five-star ratings to 14 health plans and 5 prescription drug plans.

About 75 percent of Medicare’s 54 million beneficiaries are enrolled in a private health or drug plan. The rest get traditional Medicare.

Raskin said because health insurers know seniors are most likely to pick plans based on price, they are hesitant to charge a monthly premium if they have not had one, or to implement a major rate hike.

This article was produced by Kaiser Health News with support from The SCAN Foundation.