How are Seniors Choosing and Changing Health Insurance Plans?

What factors lead beneficiaries to not be enrolled in the “lowest cost” health plan?

This was the first one that I’d ever had, you know, the first time I was on Medicare with the Part D and I was young and impressionable when I made the decision and it was purely based on the fact that 95 percent of my medications were zero co-pay.
-PDP Beneficiary (Baltimore, MD)

Seniors in this study were asked to think back to when they last chose a Medicare Part D plan or a Medigap policy (if in traditional Medicare) or a Medicare Advantage plan.  They mentioned a number of factors they weighed in their decision making, with costs usually at the top of the list.  Other considerations included staying with a particular provider, familiarity with the insurance company, the plan’s marketing efforts, staying in the same plan as a spouse, and the plan’s coverage.

Beneficiaries define “lowest cost” differently

 A couple of scripts are like “Phew. It’s the meds or the car payment, what do I do?”
-PDP Beneficiary (Baltimore, MD)

I look at the cap and then I want to look at the hospitalization. What I care about is if I have a major issue and go in the hospital and my out of pocket [is] $2,500 dollars or $5,000 dollars.
-Medicare Advantage Beneficiary
(Memphis, TN)

It often but not always means the premium.

Beneficiaries are concerned about the cost of health care because most live on fixed incomes with limited savings.¹  When they think about costs, the first thing that comes to mind for most beneficiaries is a plan’s monthly premium, because it is a predictable, monthly expense that they will incur regardless of their health needs.  However, many beneficiaries, particularly those in poorer health also consider deductibles, co-pays, and other out-of-pocket expenses they might incur. Focus group participants who interacted more with the health care system tended to be more sophisticated in their thinking and calculations around cost.  For beneficiaries in Medicare Advantage, they examine the premium and may also look at the deductibles and out-of-pocket costs for different services, such as hospitalizations, especially if they have needed those services in the past.  For those in Part D plans, they look at the premiums and deductibles, and may consider the cost of a specific drug if they take one that is particularly costly or one that is particularly important for treating a chronic health condition.  Some beneficiaries in poorer health said they tried to anticipate what health care they might need in the future, and defined the lowest cost plan as the one that placed them at the lowest financial risk, while healthier beneficiaries tended to focus more on the premiums, particularly beneficiaries in PDPs.

Cost is important but other things are more important to beneficiaries

Many seniors want to have access to specific healthcare providers.

I want the choice.  I like the PPO because I have a choice.  I might not like this doctor always and want to go someplace else.
-Medicare Advantage Beneficiary
(Seattle, WA)

When we travel … we like the idea that CVS is up there, the networking is there.  [It is] very easy to walk in and you’re just like an old friend, because you’re with that program.
-Medicare Advantage Beneficiary
(Tampa, FL)

For people considering Medicare Advantage plans, a top issue is whether their doctors are part of the plan’s network. In most cases, people are concerned about maintaining access to their primary care physician.  Many of those with specific health needs, however, are often more concerned about having access to a specialist they are used to seeing. While some seem willing to give up their regular doctors to have a more affordable plan, others are not. It seems to depend (at least to some extent) on the strength of the relationship between the doctor and patient.

Importantly, people are not only concerned about whether their plan allows access to their preferred doctors; access to certain hospitals or health centers also matters. Some mentioned specifically that they wanted to be sure they could go to the best hospital in their area or that, if they were diagnosed with cancer, they could go to the best treatment center in their area.Many people with stand-alone Part D plans said having access to the pharmacy they are familiar with or that is close to their home is very important to them, and often more important than drug prices. Some have strong relationships with their pharmacists and do not want to give that up.

Familiarity with the name of the insurance company is important to many beneficiaries.

Names matter to beneficiaries. Some are drawn to certain plans and turned off by others simply because of the name. At a most basic level, a plan from a company with a recognizable name seems most important. Some expressed hesitation about the idea of going with a plan from a company they had never heard of, even if that plan was cheaper than their current one.

I wouldn’t go to Bob’s discount liquor and used clothing store/Part D insurance coverage.
-PDP Beneficiary (Memphis, TN)

When I chose my current one I chose it because of the credibility of AARP; they were bound to be my advocate.
-PDP Beneficiary (Memphis, TN)

Reputation Matters.  Apart from simple name recognition, reputation matters – and people make certain (good and bad) associations with specific names. For example, several people said they decided to go with a plan through AARP because they knew AARP and trusted that it would be a good plan. Others, however, were turned off by AARP plans because they did not agree with the organization politically. People also associate certain reputations with big insurance companies like Blue Cross Blue Shield, United Healthcare, and Aetna. Some have impressions of certain companies being good or bad and this influences their willingness to look into their plans.

A few expressed commitments to certain companies and this helped them narrow down their choice of plans. For whatever reason, some had decided they wanted a plan from a specific company a priori and when it came time to choose a plan, they only considered plans offered by that company.

Some seniors stay with the same company through which they had employer-sponsored insurance or other insurance prior to going onto Medicare.

In my case my husband retired from AT&T so we had United Healthcare for years. So the plan that they offer is the Advantage plan so we didn’t have a whole lot of choice.
-Medicare Advantage Beneficiary
(Memphis, TN)

A few people mentioned that they decided to go with a specific insurance company because they had insurance through them before they were enrolled in Medicare. They were already familiar with the company and with the customer service, so it seemed relatively easy to just stay with them. One man, for example, was with Humana when he was employed. When it was time to enroll in Medicare, he went to Humana’s office and they helped him choose a new plan and sign up the same day.

Plan representatives and marketing influence plan choices.

While not a top factor in choosing plans, the extent to which beneficiaries feel like they are receiving good customer service matters. This is especially true when they are choosing their initial Medicare plan. If a company has good customer service and can answer their questions about plans in a clear way, this makes beneficiaries more likely to go with that company. If they have a bad customer service experience early on, they are turned off.Many enroll in plans after talking with a plan representative at an information session or having one over to their home to discuss the details of plans. This face-to-face interaction is important to many, and it often seals the deal.

Some want to make sure they have the same plan as their spouse. 

When choosing a plan, some married beneficiaries say they make sure they and their spouse have the same plan (or at least the same company). In most cases, this seemed to be a matter of convenience and practicality. They say it is easier to keep track of information, rules, changes, and the like for a single plan rather than two. It helps avoid confusion and makes life easier. In a few cases, the spouses seemed to have very different health needs, but they still felt the convenience of having a single plan outweighed the potential benefits of having separate plans that might better meet their health needs.

Not all married people see things this way. Many explained that one spouse had very different needs than the other and that having the same plan did not make financial sense for them. For example, one spouse might have a chronic condition that requires a lot of care and medication while the other is healthy. Many people with spouses explained that in a case like this, they would not prioritize having the same plan; however, in a few cases, spouses taking different prescription drugs preferred to be in the same PDP despite their different health needs.  

Having good coverage for drugs and needed medical services is an important factor for many.

Coverage is important, particularly when prescription medications are involved. When it comes to Part D plans, they want to know first and foremost that their current medications are going to be covered. Many are also often checking for more general coverage information like the extent to which brand name versus generic drugs are covered.

When looking at Medicare Advantage plans, they want to make sure the healthcare services they may need are covered. Among those with specific health needs, they are looking to make sure they can get the care they know they will need. Among those without many current healthcare needs, some look for plans that cover any and everything they might need in the future. Others, however, want to make sure they are not going to end up paying to cover services they do not expect to use.

Among those with Medicare Advantage plans, the ability to get vision and dental coverage is a major draw. The addition of other services like the Silver Sneakers (exercise and gym) program is also attractive to many. They like feeling like they are getting a lot of services out of the plan, even if they do not use them.

Medicare’s star ratings do not influence decisions very much (if at all).

Most are unaware of consumer tools like the star ratings that Medicare provides and as a result do not use them in making their decisions. Overall, people seemed to think the star rating system could provide them with some helpful, additional information but did not suggest that it would be a decisive factor for anyone; instead, it would be another piece of information to consider. Focus group participants wanted to know more about how the rating system actually worked.  For example, they wanted to know who creates the rating, based on what criteria, and how often it is updated.

Some have seen these ratings and considered them, but explain that they did not play a major role in their decision-making process. Likewise, among those who were unfamiliar with the ratings, the general sense was that they would look at the ratings, but they would not likely weight them heavily in their decision. New, outside information about their plan does not necessarily make them question their initial choice.  This is especially true if they already have personal experience with a plan; in most cases, their personal experience would outweigh the star rating.

If they are generally satisfied, they are not likely to consider changing plans even if they learn about others’ negative reviews of the plan. For example, most say that learning that a friend has had a bad experience with the same plan would not make them consider changing. They say that this is one person’s experience, not theirs.  Likewise, if they found out that their plan only had three stars in Medicare’s rating system, they would not necessarily start looking for a plan with more stars. They view the ratings as based on other people’s experiences, which are not necessarily relevant to them. But when asked what they would think if they found out their plan had a very low rating (say, less than 3 out of 5 stars), many said they would at least look into it to see why.

There was one notable scenario when the star rating system was relied on by focus group participants, or in this case, the absence of a star rating altogether.  One man mentioned that he ruled out a plan because instead of having a star rating, it said “plan is too new to be rated.” This made him feel like the plan might be risky since it was so new.  

Beneficiaries find it too difficult to compare plans

They receive and collect a lot of information from various sources.  

Some beneficiaries say they have gone to the Medicare Compare plan finder website on Medicare.gov to learn more about plans and make comparisons, but most have not. Among those who have gone to Medicare.gov, a few found the information to be helpful at a general level, but most say that once you get into the details of plans, the information on the site is confusing. They think the language is too technical and the comparisons are not very helpful because the information is not standardized. Additionally, many explain that they are not very savvy with the computer and navigating the website is just too much for them.

Some have called Medicare’s 800 phone number with mixed results. A few say they had good experiences and received customer service that helped them with the information they needed. Others complained of long wait times or less than helpful customer service.

Everyone recalls receiving the “Medicare and You” handbook. It seems that most people look at it initially but do not use it to choose a plan.

Focus group participants also received booklets and information from health plans. People said they use them to see if their doctors and prescriptions are covered in the plans they are considering. But this is often the extent to which these materials are used. People say they are not easy to read, and are not always up to date with the current lists of physicians accepting specific plans.

Beneficiaries explain that they receive and seek a lot of information about plans when they first enroll in Medicare. Sources of information include the following:

• “Medicare and You” handbook sent out by the Centers for Medicare and Medicaid Services
• Information from insurance plan websites
• Plan materials sent to their homes
• Informational sessions hosted by insurance companies
• Infomercials on television

Many mentioned that they do at least look over the information for their current plans during open enrollment to make sure they are aware of any changes that might be taking place. Many people with Part D plans, for example, will review their formularies to make sure their prescriptions are still covered. But this is done more as a housekeeping task, not necessarily as a step toward changing their plan. If any red flags are raised in this process, however, they may consider looking into other options.

Seniors say they have tried to compare the costs, coverage, and provider networks of plans, but find it frustrating and confusing.

For those who do not engage very frequently in the healthcare system, their monthly premium is the main cost they consider – often looking for the lowest premium and either not paying attention to or not worrying about deductibles and co-pays because they do not expect to need much healthcare. This was especially true among many Medicare Advantage enrollees, who explained that they had plans with very low premiums. The trade-off was higher co-pays (especially for hospital stays), but many felt that the tradeoff was worth it given how little they expected to use healthcare services.

For those who see doctors often or take a lot of medication, determining their total expected costs can become quite complicated. This is a very frustrating aspect of sifting through plan information and trying to make a choice. It may be that no Part D plan, for example, covers all the medications they need, so they have to figure out what their out-of-pocket spending would be for several plans. A few people explain that they make spreadsheets to lay out all of this information. Most, however, either just do the best they can or enlist the help of insurance agents, adult children, or others to help them figure it out.

Seniors rely on insurance agents as trusted advisors.

Following the advice of an insurance agent seemed to be the most common way that people chose their plans. They trust agents as valuable sources of information who can help them figure out the best plan for them. Many have agents they have worked with before enrolling in Medicare and stick with them. Others find new agents through referrals or because an agent proactively sought them out as a customer.Few seem to have concerns about insurance agents’ objectivity or potential biases. They view them as knowledgeable professionals who can help simplify what feels like a very complicated decision-making process.

Many receive suggestions from friends. Most say that they would not blindly follow a friend’s recommendation. They recognize that what is good for one person may not be right for another. But they often take friends’ experiences into account as starting points to look into certain plans. Also, if they hear that a friend is getting a good deal (a low premium, for example), this may spark their interest to look into that plan.

Many get suggestions from pharmacists and doctors’ offices. 

Many beneficiaries say they start narrowing down their plan options by asking their pharmacist or doctor’s office what insurance they accept. This is a way for them to make sure they are looking into plans that would allow them to continue using their pharmacy and keep their doctor. Very few talk about these issues with their doctors directly, however. Most view their doctors as not knowing much about insurance.

While most seniors say they heavily weighed costs when selecting their plans initially, costs do not seem to be as important after they are enrolled.  A number of seniors in this study acknowledged that their costs had risen since they first enrolled but that they still had not considered changing plans.  They offer a number of reasons for this, including wanting to avoid the frustrating process of choosing a new plan, fears that they will be worse off in a new plan, and an expectation that costs are going to increase regardless of which plan they choose.