Making the transition from employer insurance to Medicare

Is Medicare complicated and often opaque and impenetrable? You bet. But the larger story here is that all health insurance is complicated and often opaque and impenetrable. Many of us have been shielded from this unpleasant reality by our employer group health plans. They had to navigate this complexity, not us. We just had to pay a premium, usually reduced by an employer subsidy (so we didn’t really know what our health insurance cost). Usually, we got plain vanilla health coverage, and that’s all we expected. Maybe, if we worked for forward-thinking employers or had gilt-edged union benefits, we would get a little choice — Neapolitan ice cream health insurance. But that was it. The complexity was there all the time. Ask anyone without employer health insurance who has had to navigate this system. It can be a nightmare. But we were spared.

There are no private insurers or big marketing and communications staffs helping you make sense of Original Medicare. This job is done largely by the Centers for Medicare & Medicaid Services, directly and through contractors it hires. The result is often a communications vacuum. Social Security handles a major administrative load for Medicare, and its level of clarity also leaves a lot to be desired. But at least Social Security does this through its own employees, not cadres of outside contractors.

You can, in theory, find out nearly everything you need to know by going to and spending endless hours hunting for information that you didn’t know you needed to know. Finding a needle in a haystack is tough enough, but at least you know what the needle looks like. What if you don’t? Or if no one tells you to look for the needle in the first place? Or how to find it?

But leaving the health care herd is not all bad news. It doesn’t just mean we’re on our own. It also means the health care system is changing so that we can and should expect care that is tailored to our personal needs. This will be more and more possible, and eventually, individualized health care will be the standard of care we expect. But it’s not the default standard today, not by a long shot. To demand what’s theirs and get it, Medicare beneficiaries need to know how to operate in today’s world of health care.

Sheena Iyengar is a leading expert in how people make choices. One of her most famous experiments involved a food store where shoppers were asked to taste a new line of 30 jams on a display table and were told they would get a dollar off on any of the new jams they later chose to buy. A few days later, the store repeated the promotion, but instead of displaying 30 flavors of jam, only 6 were on the table. Because all “Get What’s Yours for Medicare” readers are above average, you probably already know the answer to this story. People tended only to look at jams when there were 30 on display but the level of actual jam sales was 10 times higher at the table where only 6 were offered. Too much choice, it seems, is a bad thing. People’s minds are overloaded, and they often respond by shutting down and doing nothing.

So it is with Medicare or, more precisely, the various Medicare insurance products offered by private insurers. Thousands of private Medicare Advantage plans are offered in different markets across the country, with a typical consumer often having a choice of 20 or even 30 plans, especially in urban markets. Most of these plans included coverage for Part D.

The choice among Part D drug plans is also daunting. even more extensive, which of course means worse in terms of consumer confusion. Part D plans are described as voluntary per Medicare rules, which strikes me as a really bad idea. Who except the 1 percenters can afford to pay for their own meds? Yet while Medicare is telling people they are not legally required to have Part D plans, it will sock them with potentially enormous penalties should they fail to enroll in the plans when they first take Medicare.

Whatever the exact number of plans you can choose from, it’s clear there is too much jam on the Medicare table for people to make good choices. Behavioral psychologist Barry Schwartz teaches at Swarthmore College and is the author of “The Paradox of Choice: Why More Is Less.”

“People make worse decisions when there are lots of options,” Schwartz once told a meeting about Medicare policy choices convened by the Kaiser Family Foundation, which tracks all flavors of health care. “This is especially true when the things people are deciding about are multi-dimensional and complicated, as for example, choice of a prescription drug plan or a health insurance plan.”

The other thing that happens when we have the option of choosing among lots of things, Schwartz said, is that we think we should make the best choice because there are so many good options. Instead of empowering us to move forward, we tend to become paralyzed, because we have little confidence that we have what it takes to choose the best option.

I am convinced this confusion is the dominant reason why so many people do not venture beyond Original Medicare. It also is the reason that they are so reluctant to switch Medicare coverage in later years.

You need to learn enough to buy the right policies and then, of equal if not greater importance, how to best use them to get the best medical care you can at the lowest price.

Do not expect Medicare or your insurers to do this for you!