Medicare beneficiaries have a choice between over 40 prescription drug plans in each state. Some counties even have over 70 different offerings. Seniors can shop among the plans and choose the one with the best coverage of their prescription drugs. But a new study found that most Medicare Part D enrollees don’t choose the best priced option.
Only 6 percent of seniors chose the lowest cost plan offered in their area in 2006, according to an analysis of 55,000 individuals who had a Part D claim in 2006 by Jonathan Gruber, a Massachusetts Institute of Technology economist, and the Kaiser Family Foundation. Enrollees who didn’t choose the lowest priced plan could have saved an average of $520 on their monthly premiums and out-of-pocket expenses if they had done so. And only 10 percent of seniors chose one of the five percent of plans with the lowest costs, which would typically have resulted in $400 in savings. About half of part D beneficiaries (53 percent) did enroll in one of the lowest cost 25 percent of drug plans. Other seniors could have saved an average of $220 by following suit.
Gruber notes that other factors besides cost alone could have influenced the senior’s decisions to enroll in higher priced plans including a strong brand name, good reputation, fewer utilization restrictions, or even a convenient in-network pharmacy.
The Centers for Medicare & Medicaid Services has a tool into which you can enter the drugs you expect to take next year and compare the expected out-of-pocket costs under the various plans in your area. “Basically, all I did in my analysis was to replicate their calculator and show how much better folks would have done if they had used that calculator to use the lowest cost plan,” says Gruber. Retirees can switch into new plans once a year during the annual open enrollment period.