Gruber: Seniors Should Be Limited to Three Lowest Cost Medicare Part D Plans
In a 2009 paper, "Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program," Obamacare advisor Jonathan Gruber argued that there were too many Medicare Part D plans for seniors to choose from, which led them to make bad decisions when enrolling in a plan.
In the paper, written for the National Bureau of Economic Research, Gruber wrote with Jason T. Abaluck that the privatization of the public Medicare program had resulted in dozens of private insurers offering a wide variety of insurance products for seniors to choose from. The result of so many choices, Gruber wrote, is that seniors are not making decisions that are in their best interest. "First, elders place much more weight on plan premiums than they do on the expected out of pocket costs that they will incur under the plan. Second, they substantially under-value variance reducing aspects of alternative plans. Finally, consumers appear to value plan financial characteristics far beyond any impacts on their own financial expenses or risk."
The paper noted that while standard economic theory would suggest that expanded choice is a beneficial plan feature, "There are reasons to believe that the standard model is insufficient, particularly for a population of elders. There is growing interest in behavioral economics in models where agents are better off with a more restricted choice set."