Fifty million people are in the process of making a critical health care choice: Do I keep my current Medicare plan, or do I switch to a different one? Yet, not a single one of those 50 million people will have proper information to make the right choice.
The sad reality is that older and disabled Americans have more information about purchasing a kitchen microwave than health care coverage. Consumer Reports tracks all sorts of quality measures—from how well that microwave defrosts food, to how loud it is. Not so with a big chunk of Medicare. Beneficiaries don’t have any sense of the quality of care they are receiving in the original, fee-for-service Medicare program, which covers 69% of beneficiaries. If you are a 67 year old from Toledo, Ohio with Type 2 diabetes, you’re going to be particularly concerned about controlling your cholesterol and lowering your risk of developing coronary heart disease. But currently, you cannot find reliable information on how well doctors who are in original, fee-for-service Medicare in your area, are helping patients like you.
This omission stems from the birth of Medicare in 1965, which was not conceived as a unique health plan with its own strengths and weaknesses. Rather, at that time, Medicare was a single, public health plan that accepted all providers and paid them all the same way. Today, Medicare beneficiaries have an average of 19 choices for their health coverage including original Medicare. Those choosing original Medicare have an additional 30 choices for Part D prescription drug plans and a multitude of choices for supplement medical coverage. Moreover, original Medicare today is a hotbed of innovative ways to pay providers and reward higher quality care, which produces different results in different parts of the country. Even with the current round of innovations, the quality of care for beneficiaries is hardly uniform.
Amidst these choices and changes, Medicare beneficiaries have a blindfold over one eye. A more recent program, Medicare Advantage, offers more transparency—these private plans have a “star” rating based on their quality of care and their customer satisfaction. Beneficiaries can view plan star ratings on specific quality measures that may be of personal interest (such as cancer screening), help with managing chronic conditions, and customer service. Not so with original Medicare.
Congress has not gone back to require original Medicare to report on its overall performance as a plan with its own unique characteristics. Further, Medicare’s plan selection tool, Plan Finder, is limited to the choices for Medicare Advantage and prescription drug coverage and does not include Medigap coverage that supplements coverage for original Medicare. Those choices are listed separately, so shoppers never get a full picture of the costs of their options.
Better information can make a big difference. Looking at consumer behavior shows us that when options are made clear, beneficiaries are more likely to choose high quality at an affordable price. In other words, they choose value. A recent study found that star ratings drive enrollment decisions—for both first-time enrollees and for beneficiaries who switch plans. For first-time enrollees, a 1-star increase in a plan’s rating led to a 9.5 percentage point increase in the likelihood of enrollment.
With 10,000 Baby Boomers becoming eligible for Medicare each day, Congress has a prime opportunity to help tens of millions Americans make better choices.
Lawmakers need to improve the current star rating system—and then apply it across all Medicare plans. Specifically, this upgrade needs to include key measurements around the quality of care—if were hospital admissions prevented, what were mortality rates after a hospital admission, and how did patients experience their care? Star ratings can take various factors into account when upgrading these new quality metrics, including weighting the ratings for those institutions that cover patients with higher rates of chronic disease, disability, and mental illness.
In order to get consumers more information about the quality of care under each plan, lawmakers also need to ensure that health care providers don’t drown in new reporting requirements. Current reporting mechanisms can be consolidated and incentives offered to make sure that providers are reporting but also having enough time to treat patients.
Finally, in the era of Orbitz and Kayak.com, Medicare’s Plan Finder should be overhauled so beneficiaries can have an effective tool to help them choose the plan that fits their needs. Medicare Plan Finder should include original Medicare’s new star rating to facilitate direct quality comparison between original Medicare and Medicare Advantage. Plan Finder should also let beneficiaries view the total cost and quality of their care under different options using a simple way to narrow choices so they do not get overwhelmed. And once a beneficiary selects a coverage option, enrolling should be as easy as the click of one button.
Americans face a host of challenging decisions as they retire. Making the right choice on their health insurance shouldn’t be one of them. With a handful of commonsense changes, Washington can take the blindfold off choosing a Medicare plan—and give older and disabled Americans tools they need to get the right health plan and the peace of mind that comes along with that.
David Kendall is the senior fellow for health and fiscal policy at Third Way, a center-left think tank that has launched an effort cut waste in health care by removing obstacles to quality patient care.