A new Health Affairs Web First study finds that increased choice among Medicare Advantage plans leads to increased enrollment in the program among elderly Americans, but only when beneficiaries are choosing among 15 or fewer plans. When Medicare beneficiaries have a choice of 15 to 30 private plans, increased choice does not result in increased Medicare Advantage enrollment, and when 30 or more plans are available, increased choice actually results in decreased enrollment.

This study is also the first to directly examine the influence of cognition on enrollment decisions in Medicare. It  finds that seniors with impaired cognition are less likely than those with better cognitive abilities to enroll in Medicare Advantage when plans offe more generous benefits.

The study, by J. Michael McWilliams and coauthors from the Harvard Medical School’s Department of Health Care Policy and Brigham and Women’s Hospital, will also appear in Health Affairs’ upcoming September edition. It is part of The Care Span, a new ongoing section of the journal supported by the SCAN Foundation that  examines the topics of aging and disability.

To examine the effects of multiple plan options on enrollment in Medicare Advantage, the authors looked at 21,815 enrollment decisions from 2004 to 2007 made by 6,672 participants in the Health and Retirement Study, a national longitudinal survey conducted biennially by the University of Michigan. They found that if fifteen or fewer plans were available in a region, more choices usually led to an increase in Medicare Advantage enrollment. When the number of options surpassed thirty, as it did in 25 percent of US counties, more choice was associated with decreased enrollment in the program.

Importantly, elderly adults with low cognitive ability were much less likely than those with high cognitive ability to switch into Medicare Advantage when the benefits became more attractive relative to the traditional Medicare program. These findings suggest many Medicare beneficiaries are unable to access or process information and consequently make suboptimal enrollment decisions when faced with complex insurance choices.

“Health care reforms that restructure and simplify choice in Medicare Advantage could improve beneficiaries’ enrollment decisions …and help invigorate value-based competition among managed care plans in Medicare,” conclude the authors.