A study by Associate Professor of Economics Jason Abaluck at Yale University last year showed discouraging results when it comes to the efficacy of retirement health care plans.
The study attempts to approximate a randomized controlled trial, by analyzing the outcomes when people were forced to switch plans due to a plan’s termination. They compared what happens when people are forced to switch from plans with extremely low, versus plans with extremely high mortality rates.
By observing how mortality rates changed after they were in a new plan, they found the higher-priced plans in fact do appear to have better mortality outcomes.
Many retired people are doing their best to conserve their nest eggs, so health care plan premiums become a category where some try to cut corners. The lower-cost plans may have limited access to specialists, or have rules that manage care, by delaying or minimizing treatments.
Like any type of insurance, the policy holder does not really know how the coverage will work until there is a claim. Here, the lower-cost plans seem to offer poorer coverage when people start to get sick, leading to the higher mortality.
The study’s author suggests that the highest mortality plans simply be terminated each year, or that insurance carriers be required to carry life insurance on their enrollees, as well. Some form of life insurance could give the carrier an incentive to provide services that actually prolong lives.
In reality, we should not blame insurers or the lack of health care for everything that ails us. There are many things we can do to look after our own health in retirement. We know most of them already.