Plan Choice and Switching Decisions in the ACA Exchange and Medicare Part D

Johns Hopkins University, Baltimore MD

Investigators

Abstract

Project Summary This project seeks to analyze consumer choice and health insurance plans in the ACA Exchange and Medicare Part D prescription drug plans. Both contexts allow for enrollees to choose from a diverse set of private plans. The share of people who are covered under insurance plans purchased marketplace settings has increased over time, but not much is known about how consumers value different health plan attributes and make plan switching decisions in these choice-rich environments. There is a very small literature on individual plan choice decision-making in the ACA Marketplace due to data constraints. Previous Part D plan choice studies have not focused on the effect of health shocks on plan switching. A better understanding of these issues could help improve the design of the plan choice platforms and in turn help policymakers improve consumer welfare in government-funded marketplace insurance programs. This proposal's Aim 1 analyzes how enrollees make tradeoffs between different financial and non-financial attributes on the ACA Exchange in their plan choice and switching decisions. Aim 2 explores the effect of having a health shock on Part D plan switching decisions and changes to enrollee plan attribute valuations. Aim 3 evaluates how different changes to the plan choices available to enrollee (e.g., insurer exit and network size restrictions) affect consumer welfare using simulations with estimates from Aims 1-2. This study closely aligns with AHRQ's priority areas of improving health care efficiency/cost transparency and focuses on key elderly, chronic condition, and lower-income priority populations. An innovative feature of the proposal is the use of person level enrollment data to explore ACA plan choice and switching. This research will be the first to examine how consumers make tradeoffs between financial and non-financial attributes (e.g. network size and plan quality ratings), and will be the first to examine ACA State Exchange plan switching decisions. This study will also provide insight on how consumer welfare changes due the simulated effects of insurer exit and insurer network size restrictions due to changes in how well choice sets match enrollee preferences. Moreover, this study will be the first to specifically explore the effects of having a health shock on plan switching and plan choice decisions among Part D enrollees. The study is also novel in exploring plan choice, health, and spending changes that affect decisions to enter Part D by enrollees previously enrolled in only Medicare Parts A and B. The ACA data consists of plan enrollment data from the California, Washington, and Colorado marketplaces for 3-4 years in 2014-2017 linked to data on plans, enrollee choice sets, and provider networks. Medicare Part D data has been obtained for 2013-2015 which include plan information, drug claims, chronic conditions, and cost and use files. Conditional logistic and mixed logit regressions will be used examine enrollee plan choice and switching as a function of an extensive set of plan attributes. The ?logsum? technique will be used in conjunction with simulated choice set changes to calculate changes in expected consumer surplus welfare. Addressing these questions could help policymakers in their efforts to improve information conveyed on the marketplace websites, quantify the benefits of having insurance choice, and in turn improve consumer welfare in these programs.