Medicare beneficiary decision making about health insurance: Implications for a voucher system

Stephen A. LaTour*, Bernard Friedman, Edward F.X. Hughes

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


A two-phase study involving focus group interviews and a survey of 2, 016 Medicare beneficiaries was conducted to examine beneficiary decision making about health insurance under a hypothetical Medicare voucher program. Some of the major findings were that: (1) beneficiaries lack important information about Medicare and health insurance in general; (2) plans with physician restrictions, no restrictions on hospitals, and benefits for custodial long-term care at home or in nursing homes are most preferred when prices are roughly equal to actuarial costs; (3) plan features often interact rather than combine additively to affect choices; (4) price sensitivity is small in comparison with sensitivity to other plan features; (5) price sensitivity is particularly small for plans with custodial long-term care benefits; (6) Medicare would not experience substantial selection bias in a voluntary system containing a wide range of plans preferred by beneficiaries; (7) physician-restricted plans would experience favorable selection; (8) plans with long-term custodial care benefits would experience some adverse selection which might be handled by modest price adjustments in view of the relatively low price elasticity of preferences.

Original languageEnglish (US)
Pages (from-to)601-614
Number of pages14
JournalMedical care
Issue number7
StatePublished - Jul 1986
Externally publishedYes


  • Decision making
  • Health insurance
  • Health plan choice
  • Insurance selection effects
  • Medicare

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health


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