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Millions pass up free health subsidy
Date:5/6/2013

Millions of seniors are turning down free money.

The Low Income Subsidy for Medicare Part D is a rare beast in economics research. The subsidy provides prescription drug coverage essentially free for low-income adults. That means it is what economists call a dominant option. For those who are eligible, there is no rational reason not to choose it. And yet, a new study shows that many eligible seniors do not take advantage of the program, despite outreach efforts by the Social Security Administration.

"We examined the role of seniors' cognitive abilities in explaining this puzzle," said J. Michael McWilliams assistant professor of health care policy and medicine at Harvard Medical School and Brigham and Women's Hospital and senior author of the paper. "If impaired abilities to access and process information are a root cause, simply providing seniors with more information is unlikely to help them make better choices."

McWilliams and his team analyzed data from the nationally representative Health and Retirement Study on seniors who were likely eligible for the Low Income Subsidy and found that seniors with lower cognition and lower basic math abilities were less likely to enroll in Medicare Part D, and less likely to apply for the subsidy if they did enroll in Part D. The study results will be published in JAMA Internal Medicine on May 6.

In addition to raising important questions about how to best extend important benefits to a vulnerable population, the study raises questions about the extent to which consumer choices can be relied upon to reward value and drive competition in Medicare in general, the researchers said.

Medicare Part D provides seniors with a variety of plans to choose from for prescription drug benefits. The low-income subsidy reduces the cost of premiums and co-pays, and for the lowest income group the cost of benefits is entirely covered.

Those who qualify for Medicaid and are al
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Contact: David Cameron
david_cameron@hms.harvard.edu
617-432-0441
Harvard Medical School
Source:Eurekalert

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