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MIT Study: Confusion Over Medicare Drug Plan Costly to Elders

New America Media, News Report, Posted: Mar 12, 2009

A linguist hoping to collect curses in many cultures might go to different senior centers and simply mention the Medicare Part D prescription drug plans. Since Medicare fully implemented Part D program in 2006, older Americansand their boomer children--have been exasperated by the bewildering array of private insurance plans theyve had to chose from, more than 50 in many states.

While the programs defenders praise its benefits for millions of older Americans and tout its variety of market choices, many advocates for elders express dismay over the daunting amount of decision making for elderly health care consumers.

How have so many choices served older consumers? Not very well, say health economists at the Massachusetts Institute of Technology (MIT). In their new study for the Kaiser Family Foundation, the MIT researchers found that most seniors did not
choose the lowest-cost Part D plan available to them in 2006.

In fact only six percent of elders chose the lowest-cost plan offered in their area. The other 94% would have saved an average of $520 had they done so, report MITs Jonathan Gruber and his co-researchers.

Gruber and colleagues note that some older consumers did not pick the cheapest plan because they selected a provider with a strong brand name or good reputation. Others, they said, were willing to pay more for a plan with fewer utilization restrictions, such as prior authorization requirements. About half of Medicare drug beneficiaries did chose one of the lower 25 percent of plans in cost.
Overall, though, the MIT health economists say their findings suggest that choice across such a wide range of Part D plan options may not be in the best interest of beneficiaries who are looking to maximize their savings.
To download the study www.kff.org/medicare/7864.cfm. The foundation also has updated its two-page fact sheet on the Medicare drug benefit at www.kff.org/medicare/7044.cfm.

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