Choosing the Right Medicare Prescription Drug Plan: The Effect of Age, Strategy Selection, and Choice Set Size

Objective: The Medicare Modernization Act of 2003 (better known as Medicare Part D) represents themost important change to Medicare since its inception in the mid-1960s. The large number of drug plansbeing offered has raised concern over the complex design of the program. The purposes of this article areto examine the effect of age and choice set size (3 vs. 9 drug plans) on decision processes, strategyselection, and decision quality within the Medicare Part D program. Method: One hundred fiftyindividuals completed a MouselabWeb study, a computer-based program that allowed us to trace theinformation acquisition process, designed to simulate the official Medicare Web site. Results: The datareveal that participants identified the lowest cost plan only 46% of the time. As predicted, an increase inchoice set size (3 vs. 9) was associated with 0.25 times the odds of correctly selecting the lowest costplan, representing an average loss of $48.71. Older participants, likewise, tended to make poorerdecisions. Conclusion: The study provides some indication that decision strategy mediates the association between age and choice quality and provides further insight regarding how to better design a choiceenvironment that will improve the performance of older consumers