A new study from the Kaiser Family Foundation finds that most seniors enrolled in Medicare's prescription drug benefit plan did not choose one of the lowest-cost drug plans offered in their area.
Since 2006, Medicare beneficiaries have had the opportunity to choose from among dozens of plans to get the Part D prescription drug benefit. Ideally, the options should allow beneficiaries to select a plan that provides the best value for their individual needs.
The new Kaiser study used actual pharmacy claims experiences and premium and cost-sharing information about Medicare prescription drug plans to determine whether seniors chose the lowest-cost plan for them, based on their drug claims for 2005.
The analysis models the approach seniors were advised to follow in choosing a plan based on their current medication regimen.
The study found:
- 6 percent of seniors chose the lowest-cost plan offered in their area in 2006; enrollees who did not choose the lowest-cost plan would have saved $520 on average in 2006 had they done so.
- 10 percent chose one of the lowest-cost plans, defined as the 5 percent of plans that would have resulted in the lowest costs; the others would have saved $400 on average had they done so.
- More than half of all seniors (53 percent) enrolled in one of the lowest-cost 25 percent of all drug plans; had the others enrolled in plans in the bottom quartile based on their total drug costs, they would have saved $220 on average.
The study, authored by Massachusetts Institute of Technology economist Jonathan Gruber, examined retail pharmacy claims from 2005 and 2006 for Part D enrollees ages 65 and older, gathered by the Wolters Kluwer company.
In addition to examining 2006 plan choice based on 2005 claim experience, the study also examined the seniors' choices assuming "perfect foresight" in predicting their 2006 prescription needs, and in a hybrid methodology that evaluated the lowest-cost plans under either model.
Gruber noted that a number of other factors could have influenced seniors' decisions beyond their bottom-line cost. For example, some may choose to enroll in a Part D plan with a strong brand name or good reputation, while others may be willing to pay more for a plan that has fewer use restrictions, such as prior authorization requirements.
The study did not assess the extent to which such factors influence beneficiaries' decisions, but concludes that most beneficiaries do not appear to be maximizing their savings when choosing among Part D plans.
Photo obtained under Creative Commons license. -Ed