Age and the purchase of prescription drug insurance by older adults.
The Medicare Part D Prescription Drug Program places an unprecedented degree of choice in the hands of older adults despite concerns over their ability to make effective decisions and desire to have extensive choice in this context. While previous research has compared older adults to younger adults along these dimensions, our study, in contrast, examines how likelihood to delay decision making and preferences for choice differ by age among older age cohorts. Our analysis is based on responses of older adults to a simulation of enrollment in Medicare Part D. We examine how age, numeracy, cognitive reflection, and the interaction between age and performance on these instruments are related to the decision to enroll in a Medicare prescription drug plan and preference for choice in this context. We find that numeracy and cognitive reflection are positively associated with enrollment likelihood and that they are more important determinants of enrollment than age. We also find that greater numeracy is associated with a lower willingness to pay for choice. Hence, our findings raise concern that older adults, and, in particular, those with poorer numerical processing skills, may need extra support in enrolling in the program: they are less likely to enroll than those with stronger numerical processing skills, even though they show greater willingness to pay for choice.
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