When Choice Becomes Burden: Medicare Enrollment Complexity and Patient Administrative Burden

• In Event: Administrative Burdens in Healthcare: Evidence for Multiple Disciplines

Abstract

As Americans age into Medicare eligibility, they must confront complex health insurance information environment, sorting through dozens of plan configurations. Beneficiaries must select between traditional Medicare and privatized Medicare Advantage (average of 42 plans). If opting for traditional Medicare, they must choose among 10 Medigap plans and an average of 14 prescription drug plans. I examine whether seniors effectively select Medicare plans that align with their stated priorities related to cost-sharing, premiums, provider networks, simplicity, and reliance on prior authorization. Further, I examine how health plan misalignment contributes to administrative burden and barriers to seniors’ health care access. Drawing on the administrative burden framework, I situate Medicare plan choice within a broader context of privatization, choice overload, health literacy constraints, and growing reliance on utilization management. I examine this policy problem with a new nationwide survey of 1,964 U.S. seniors using participant recruitment with the platform of Centiment. I find that just 55% of Medicare enrollees choose type of Medicare (traditional versus MA) that best aligns with their stated plan priorities. This misalignment transcends race, income, and education lines, suggesting that health plan complexity and choice overload pose challenges across socioeconomic groups. Medicare plan selection imposes substantial learning costs: respondents spent on average over 5 hours researching plans, with over one-quarter spending 10 or more hours, and those struggling to understand health information spending significantly more time. Over half expressed overwhelmed by the number of plan options. Nearly half relied on insurance brokers, but receiving broker assistance did not increase the propensity to enroll in a plan aligned with priorities, despite increasing the likelihood of enrollment in Medicare Advantage. Coverage denials were common across plan types, but administrative burdens associated with prior authorization were more salient among Medicare Advantage enrollees and contributed to Medicare dissatisfaction and plan switching. What’s more, those who better aligned their Medicare plan selection with their overarching values and priorities were more likely to rate Medicare favorably, suggesting that challenges versus streamlining Medicare enrollment may have policy feedback effects if politicians are responsive to policy support vs. opposition. Overall, the findings suggest that Medicare’s complex and privatized choice structure produces significant administrative burdens. Even when seniors are highly motivated to choose well, cognitive constraints, health literacy gaps, and plan overload undermine effective decisionmaking. These burdens can result in higher spending, restricted provider access, risk of greater prior authorization barriers, and foregone care. Plan misalignment even shapes satisfaction with Medicare itself, suggesting potential policy feedback effects that may influence public opinion and policy choices concerning Medicare. These findings raise concerns about Medicare’s reliance on market-based choice and its effect on those with lower health literacy. The findings point the way toward policy interventions such as simplification of plan offerings, strengthening unbiased resources in plan selection, and reexamining broker compensation. As Medicare Advantage enrollment continues to grow and prior authorization expands into traditional Medicare, reducing administrative burdens associated with plan selection is essential to protecting access, equity, and the long-term legitimacy of the Medicare program.

Author

• Miranda Elyse Yaver, University of Pittsburgh
  Presenting Author