dWhen I read Scripps Professor Stacey Wood's criticisms of Medicare Part D, I'm reminded of just how futile some governnment efforts are. We often think that just because we lavish money on a project and hammer out the details in committee that it will end up being successful at delivering the goods it was ostensibly set up to provide. Take this as just another example.
As the national conversation gets underway on reforming America's health care system, Stacey Wood, professor of psychology at Scripps College and an expert on issues related to aging and the brain, says one thing that should be changed are the recent Bush health reforms providing prescription coverage on Medicare Part D. "Not only are they too complicated for seniors to navigate, but they end up costing more than they needed to pay."
In a research study recently released by the Robert Wood Johnson Foundation, Professor Wood and associates, including Yaniv Hanoch, Ph.D., lead author, found that older adults were less likely to identify the plan that would cost them the least annually; and, paradoxically, of all age categories surveyed, older adults were the most confident that their decisions were correct. Wood's study concurs with recent analysis showing that less than 10% of enrollees chose the lowest-cost plan available under part D (Gruber 2009).
According to Wood: "It is curious that policymakers did not factor these possible limitations into the design of Medicare prescription drugs, but chose instead to offer beneficiaries over 50 different plans to choose from. It is particularly surprising to ask older adults to make more complex financial and medical decisions even though cognitive ability tends to decline with age. Specifically, researchers have shown that executive functioning, working memory, and the ability to simultaneously perform multiple activities—abilities that are intimately related to making sound decisions—decline with age."The economic research of course shows that when people have more choices, they tend to invest poorly. In recent years, books like Nudge by Richard H Thaler and Cass Sunstein argue that we should create structures that help "nudge" people to decisions we want for them, in effect a sort of "libertarian paternalism." I'm skeptical of these government alternatives that reduce choice. How does government know what the parameters of those choices should be? How will they help all families with whatever bounds they set?
Maybe this is an opportunity from a private employer to come in and help these families make better decisions in much the same way financial consultants help families make good decisions with their finances. Despite the data, I find it pretty paternalistic to argue that just because someone is ageing, he or she needs choices decided for themselves. Indeed, as Arthur C. Brook of AEI argues, restricting choices actually leads to a decrease in happiness. Here's what he writes about choice and happiness in a precis for his book, Gross National Happiness:
In the mid-1990s, researchers at Stanford University set up two booths in a supermarket and handed out samples of jam. One booth offered six types of jam; the second, 24. While more shoppers stopped to sample from the wider array, people who sampled from the narrower one were ten times likelier to buy a jar of jam later. In another experiment, the same researchers gave college students the opportunity to write an extra-credit essay. One group could choose from just six essay topics; the other had 30 to pick from. Those with fewer choices not only were much likelier to complete their essays; they did better work as well.So in other words,s don't restrict the choices of old people. Help them make informed decisions.
The reason that people often prefer less choice to more, psychologists believe, is that choice can overwhelm, as the costs of processing information and making a decision outweigh the gains from having more options. This idea is called the “choice overload hypothesis.” A similar concept—“moral freedom overload,” to coin a phrase—may apply in cases of moral choice. Here, too much freedom leaves us insecure and searching, unable to distinguish right from wrong, and thus miserable. And religion, which often shapes and limits people’s moral choices, is one way people have found to mitigate moral freedom overload. . . .
The recipe for happiness is a combination of individual liberty, personal decency, and moderation. And government protects our freedom best when it forgoes infringements on our moral choices but vigorously defends our right to restrict these choices ourselves.