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

so in Medicare are automatically enrolled and get the subsidy without needing to take any action on their own. Other low-income adults must apply for the benefit, and estimates suggest that more than 2 million people who would qualify for a benefit fail to apply, according to a report from the Kaiser Family Foundation. The Harvard researchers focused on those who qualify but must apply for the subsidy.

"For those who are already enrolled in Medicare Part D plans and eligible for fully covered prescription drugs, this is not 'Here's thirty plans, pick the best one.' This is, 'Here's free money, do you want it?'" said lead author Ifedayo Kuye, a student at Harvard Medical School and Harvard Business School.

Even such a simple decision requires a high level of cognition, the researchers said. In order to meet the needs of this population, which includes many people with high medical needs, including chronic conditions, the design of the program probably needs to be changed, they said. One possible remedy the researchers suggest would be to make the subsidy an opt-out program for those who are eligible, so they would not need to take any extra steps to benefit from the program.

These findings have broader implications about how much reformers should rely on choice and competition in Medicare to drive down costs, the researchers said, because competition only works if consumers are choosing wisely and rewarding value in the marketplace.

The power of competition to drive value is an important component in many health care reform initiatives, including the proposal to transfer Medicare to a voucher system, and the health insurance exchanges that are being set up as part of the Affordable Care Act.

"We may need the government or other agencies to do more on behalf of seniors and other health care consumers, both for their own well-being and if we want competition to be a force for driving up value in health care," Kuye said. <
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Contact: David Cameron
david_cameron@hms.harvard.edu
617-432-0441
Harvard Medical School
Source:Eurekalert

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