Michael McWilliams and others in 2011 looked at the impact of cognitive capacity and the number of Medicare Advantage plans available to Medicare beneficiaries to see if those factors mattered in plan choice in a Health Affairs paper.
The number of plans mattered a lot:
People got overloaded with choice and chose the default, traditional Medicare, when there were too many plans to sort out. There is a great study on the overload of choice in choosing jelly where a big spread of choices could attract attention but not purchases while a curated set of choices led to more conversions of interest into purchases. This applies to at least Medicare Advantage as well.
I have two wonders from this study:
- Do insurers intentionally overload a market to risk select in a strategic manner?
- Does this generalize to the ACA population
I am not sure where to get started with the first question.
The second question requires some data that I can not freely access (if you are a potential collaborator who knows health surveys with linked IDs to Healthcare.gov or state based marketplaces, let’s talk). However, we can freely identify the variance in plan offerings. I am using 2019 Public Use Files to count the distinct number of plans on Healthcare.gov by county for all on-exchange plans, including catastrophic. Individuals over the age of 30 and those who do not file for an exemption will see slightly fewer plans.
The range is a single county (Holmes County, Ohio) with 1 plan being offered to a single county (Seminole County, Florida) with 110 plans being offered. 2019 is a little less spread out than previous years:
| Year | Minimum plans offered | Maximum plans offered | Mean Plans offered |
|---|---|---|---|
| 2014 | 2 | 169 | 31.2 |
| 2015 | 6 | 158 | 35.2 |
| 2016 | 10 | 143 | 33.7 |
| 2017 | 2 | 110 | 19.7 |
| 2018 | 2 | 119 | 14.5 |
| 2019 | 1 | 110 | 15.5 |
I think a priori that a single plan county is giving up potential enrollment. Lost enrollment will happen for two reasons in a single plan county; first, that plan may not have desired attributes and secondly, far more mechanically the single plan can not create anything cheaper than the benchmark plan so the pricing won’t be attractive to low risk, subsidy eligible, individuals.
I also think, a priori, that counties with 50 or more plans in them are probably losing some counter-factual enrollment as well. Again, this is partially a pricing problem, but to a lesser degree than in the single plan only county as there are numerous bronze priced below benchmark. But I also think it is a search cost problem. Figuring out the minuscule differences between the plans is mentally exhausting. Individuals who know that they have a strong need for insurance will pay that cognitive management tax. Individuals who are flipping a coin between insurance and not-insurance have a non-zero probability of rage quitting.
I don’t know where the optimal range of plans being offered lies if we are optimizing on enrollment. I am very confident that the number is greater than one and significantly less than 110. Beyond that, I am uncertain. 9 to 15 plans does not sound crazy to me. 15 to 30 plans also sound facially plausible to me. I’m guessing at this point.
I am curious.
TomatoQueen
Under maybe useful: ordinary civil service feds in Northern Virginia, for the last 15 years, were offered 15 to 20 plans and possibly more: the search tool screens by age, gender, state of residence before it shows you anything at all, then you get maybe a dozen plans and then there’s sub-screen by employer (Postal Service and Foreign Service). The open season window gets shorter and shorter and the plans get more and more complicated and a lot of people sigh and give up because they don’t have time for this shit.
Ruckus
I used to have to screen plans for my business. My broker would send me the info on 20+ plans and that’s why I’m bald now. After 3 yrs or so of this I told him, send me no more than 5 plans, I want this minimum to maximum coverage. So I’d get 4 or 5 plans that worked and were decent companies, as health insurance companies go.
Too many choices had to be scored and cut down to realistic.
On the other hand in CA we had, for mandated workers comp insurance, one carrier, one price, because of our small size and I had to pay for the equivalent of 40% more employees than I had.
No choice at all meant that we got screwed.
There is a medium but because it’s a for profit business selling HCI we got the profit chasers as well as the decent. With too many choices you stand a likely chance to getting screwed. And with profit as the sole motive for selling, with not enough market, you are get screwed.
p.a.
I’m 60 and not yet investigating, so here’s my Q: does MedAd ‘require’ MediGap insurance the way trad Medicare does? That would be another layer of complication.
Ruckus
@p.a.:
I don’t think anyone actually knows. Has anyone actually come out with a plan with anything more than a name? And what could be passed? We know it wouldn’t be what it sounds like, it would have to be better than what Medicare actually is now, so what we’d end up with is anyone’s guess.
David Anderson
@p.a.: If you buy Medicare Advantage, you would not need Medi-Gap.
Elizabeth
@p.a.: I don’t believe that any additional insurance is required above MediCare itself. OTOH, you want to have some kind of Part D coverage, I would think.
Also, I am puzzled why I would WANT to choose a MediCare Advantage plan, when traditional Medi-Care means I can see anyone I want who takes Medi-Care. Where I live, choosing Kaiser means I have to stick with Kaiser exclusively, whereas I’m waiting until I can go with other specialists in the area next year when I hit the magic age of 65.
Kaiser is fine, but the do lots of gatekeeping. Their mental health therapy coverage is famously and illegally (big-time settlements levied by the state of CA) execrable, and etc. They are fine, just fine. But why not just go with Medi-Gap?
I am interested in what others know and have found out.
Elizabeth
@p.a.: I think I misunderstood your question, so am making another attempt.
IIRC, you can choose:
1. Straight Medi-Care, nothing added.
2. Medi-Gap, which supplements Medi-Care.
3. MediCare Advantage, which is like an HMO. You go with their network, rather than directly with Medi-Care.
So the choices if you choose to supplement your basic MediCare is EITHER to supplement or to choose MediCare Advantage.
Set me straight folks. I have never liked HMOs so I’m having difficulty seeing why I would like MediCare Advantage. Or do I have it wrong?
?BillinGlendaleCA
When I saw the post title in the sidebar, I thought it was a Cole post about canning. Well played David.
Michael Cain
@Elizabeth:
The last three words are the important ones. When my wife and I changed to Medicare last year, she had two specialists and a GP that she had been seeing for years — one specialist for her arthritis and the other the guy who repaired her retina. None of the three took ordinary Medicare. All three accepted exactly one Medicare Advantage plan, but no two of them the same plan. We both went with Kaiser, whose care we had always liked when we had it before. We had dropped Kaiser when my generous retiree group coverage dropped them.
If we can get some form of single payer, no matter what we call it, there will be few medical practices who will be able to afford to say, “Sorry, we don’t take insurance.”
WhatsMyNym
We are finally being offered Advantage Plans in my neck of the woods. Same company offering 3 levels of coverage. Unlikely I’ll change my mother’s coverage though.
David Anderson
@Elizabeth: If you can afford a good Medi-gap plan and can afford a possibility of needing auditory care and can pay out of pocket for dental/vision, then Medicare A&B + MediGap is a good solution.