The paper in the August edition of Health Affairs by Professors Sewin Chan and Brian Elbel, who is also on the faculty of the NYU School of Medicine, found that individuals in the lower third of cognitive ability (the general capacity to understand and use information) and numeracy, or the ability to work with numbers, were 11 percentage points less likely than those in the upper third to enroll in a supplemental Medicare insurance plan.
“This result means that many Medicare beneficiaries are not getting the financial protections and other benefits that would be available to them if they were enrolled in a supplemental insurance plan,” and policy makers should consider enhanced education programs, simpler sets of choices, or even some type of automatic enrollment system, Chan and Elbel write. [Note – the study abstract can be found at http://content.healthaffairs.org/content/31/8/1847.abstract.]
In general, traditional Medicare (parts A and B) leaves substantial gaps in coverage. To fill them, individuals can obtain extra coverage through their employers, unions, Department of Veterans Affairs, or the Medicaid program. Once obtained, this added coverage tends to be the most generous and comes at the lowest cost to the enrollees. However, it is not available to everyone.
Individuals who must enroll at their own initiative can choose either the Medicare Advantage Plan or a Medicap plan. The two supplemental plans differ in their coverage, premiums, and restrictions, but both offer significant protection from financial risk by covering copayments and deductibles, extending the available inpatient and outpatient benefits, and sometimes capping out-of-pocket costs.
Analyzing 1996-2008 data from the national Health and Retirement Study, the authors found that the weaker these individuals’ cognitive abilities and numeracy – with such weaknesses tending to be most pronounced among the poor or have multiple chronic illnesses – the greater their chances of not enrolling in any gap-filling Medicare coverage.
The authors suggest establishing an optional enrollment process that takes into account the skills of potentially high-needs groups of individuals, including a narrowed set of choices, and automatic enrollment based on a predetermined set of criteria, with an option to opt out. Under one approach, a default coverage plan could be assigned, or a smaller subset of the full choice set could be presented, based on the individual’s response to a simple set of questions gauging preferences.
State insurance education programs might also target assistance to high-needs populations, the authors suggest.
Increasingly, Chan and Elbel write, people are being asked to become actively engaged in making complicated financial and health coverage selections. “Given the emphasis on choice, an important consideration is whether individuals have the mental skills necessary to make complex health and financial choices that best serve their interests,” the study asserts. But the fact that many Medicare beneficiaries do not enroll in a supplemental Medicare plan generates societal costs, including higher health care costs due to delayed care, and a risk pool that does not include all possibility enrollees, which may also increase costs, according to the authors.
To obtain a copy of the study or interview the authors, contact the NYU public affairs officer listed with this release.
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