For Medicare Drug Plans, the High Cost of Doing Nothing

By shopping around, my father-in-law was able to select a plan that will cost him $415 (assuming his drugs remain the same.) My mother-in-law's costs will increase to $691. Even though both will see their costs rise, by changing their plans, they cut their tab in half from what it would have been.

Comparison shopping sounds like a no-brainer, but for many reasons, it's not. It is time consuming and eye glazing even for a health-care journalist to enter in drugs and review the resulting options. A study commissioned by the Kaiser Family Foundation in October found that only 13 percent of Part D enrollees, on average, switched plans each year between 2006 and 2010. Seven out of 10 people continuously enrolled in plans from 2006 to 2010 never switched.

(The analysis only looked at stand-alone drug plans, not Medicare Advantage plans in which drugs are offered in HMOs. It also excluded low-income beneficiaries, whose costs are heavily subsidized.)

One study found that 72 percent of enrollees had never changed Medicare drug plans.

"Only a small fraction of enrollees, however, are enrolled in the lowest-cost Part D plan available to them, based on the specific drugs they take," the report said. "Therefore, many Part D enrollees incur higher out-of-pocket costs than would be the case with a different plan selection."

"Part D enrollees often have difficulty with the plan selection process and find the decision-making complicated, especially because of the large number of available plans."

What the study found, essentially, is that older people and the disabled may be lulled in by lower monthly premiums, only to find that their actual drug prices are much higher.

So why don't people switch more regularly? The authors offer a few theories:

In one view, enrollment stability could be a sign of enrollees' satisfaction with their plans. Another view is that beneficiaries avoid "rocking the boat," by staying in their current plans, preferring the status quo (even at a higher cost) over the unknowns of a new plan. Alternatively, the low rate of switching plans could indicate that Medicare beneficiaries are not fully engaged in the Part D program’s choice-based system and that the task of reviewing and comparing plans in the face of many different options may be too difficult or may not seem worth the effort. This view is supported by some qualitative evidence from polls and focus groups, where beneficiaries have reported that they would prefer less choice and a simpler system.

Based on my experience helping my family members, I find the last explanation the most plausible.

Either way, whether you are a Medicare enrollee or you are friends or relatives with one, compare options. Open enrollment for 2014 ends Saturday, Dec. 7.

Plenty of help is available from Medicare and others. Here’s one place to start, Medicare Plan Finder Lessons: http://youtu.be/4SCvgSZURBA

Editor’s Note: This post is adapted from Ornstein’s “Healthy buzz” blog. Have you tried signing up for health care coverage through the new exchanges? Help us cover the Affordable Care Act by sharing your insurance story.

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For Medicare Drug Plans, the High Cost of Doing Nothing

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