When Medicare Part D was introduced in the mid-2000s, economist Jonathan Gruber logged online to set his mother-in-law up. He said it took him half a day, and he was "one of the 10,000 most qualified people in America to do this."
Gruber, Ford Professor of Economics at MIT, joined Boston Public Radio to break down the choices we have in our health care system, and why we're so bad at making good ones.
Choice is built into the current health care system, said Gruber, but it doesn't always lead to the best coverage.
"We have a lot (of choice.) About 30 percent of Americans get their insurance from an employer that offers them multiple insurance options. Everyone on Medicare has a choice between traditional Medicare and more than 20 Medicare Advantage plans, as well as 10 Medigap plans," he said. "The Medicare prescription drug offerings that elders face typically offers more than 40 private prescription drug plans. And Medicaid, which we think of as public insurance for the poor, is actually largely now a privatized insurance option with more than 275 managed care organizations in 38 states offering private health insurance options for people on Medicaid."
Gruber worked on the Massachusetts health care reform and the Affordable Care Act, and specializes in health care. He said that frustrating experience with his mother-in-law led him to research our behavior within the health care system. He found that time and time again, we make the wrong trade-off between lower premium plans that come with higher risks of out-of-pocket costs, and the higher premium plan.
"That (decision) should depend on your characteristics. If you're a young, healthy person who never goes to the doctor, you should prefer a lower premium plan that basically, if you get sick you pay a lot, but probably you won't (get sick,)" he said. "If you're a less healthy person, you should prefer a more generous plan. It turns out people just don't make choices in the way that lines up with their health. What we found is, people pay much too much attention to what the premium is, and not nearly enough attention to the risk they face spending money at the doctor and at the hospital."
Gruber said he learned a lesson from the Massachusetts health care connector which went against a general rule in economics: more choice is better.
"We set up the exchange initially in Massachusetts to jave a whole variety of choices, there were more than 100 choices and people were just confused, they didn't like it," he said. "We moved from having many many different kinds of plans to six standardized plans, and people were happier, and choices got better. That's something economics would say you never want to do, you never want to limit choice, but people were confused by the multitude of choice."