Will Medicare Beneficiaries Switch Physicians? A Test of Economic Competition

Abstract

We assess the potential of increased economic competition by examining whether Medicare beneficiaries are willing to switch to physicians who agree to accept all services on assignment. Data come from a survey of Medicare beneficiaries conducted in November 1988. Our principal finding is that beneficiaries are not sensitive to price when making decisions about whether or not to switch physicians. Less than one-half of 1 percent of the sample had switched physicians for economic reasons in the year prior to the survey. Furthermore, willingness to switch was not correlated with ability to pay. We conclude that policies aimed at altering consumer demand may not be the most effective way to control Medicare costs.

Effectiveness Research

“…It is widely accepted that individuals often do not use available information to make decisions, such as information on physician fees [24,28] and quality indicators such as hospital mortality data [10] and health plan "report cards" [26]. There are several benefits, however, to consumers from what appears to be non-use of information, such as "ignorance is bliss"; that is, some ignorance may be optimal since obtaining and using information and comprehensively evaluating all alternatives for every decision entails "costs" in time and energy [27][28][29][30].…”

Managed Care and Medicaid: A Critical Appraisal

“…Furthermore, while Medicare has sought to increase enrollment in managed care plans over the past decade, proposals to end the current system's guarantees of free choice of provider have met intense resistance from advocates for the elderly. Indeed, enrollment data suggest that managed care has a limited appeal for elderly Americans, despite promises of lower cost, additional services and expanded coverage offered as an inducement to prospective enrollees (Rice et al, 1992). To date, only a small proportion of elderly Americans (6.3 percent) have switched from fee for service Medicare plans to managed care (U.S. General Accounting Ofice, 1995b).…”

Medicaid's Role in Moves Toward Universal Health Care

“…Yet although HMOs hold much promise, they still have much to prove-even in the private sector. Their premiums continue to rise at a rapid rate, while many of their enrollees d o not appear to be terribly price sensitive (e.g., Feldman, Dowd and Gifford, 1992;Rice, Nelson and Colby, 1992). Furthermore, many existing HMOs are reluctant to accept Medicaid patients.…”