The Impact of Numeracy on Medicare Part D Insurance Choice in Older Adults

Abstract

In our research, we have completed a series of studies examining decision-making related to health insurance purchases (Medicare Part D). Results from this work have suggested that numeracy, or a basic literacy for numbers, is a stronger predictor of good decision-making than age, speed of processing, or personality style (Hanoch, Rice, Cummings, & Wood, 2009; Tanius, Wood, Hanoch, & Rice, 2009). These results dovetail finely with work from the broader decision-making literature that suggests that numeracy impacts how individuals approach and solve decision-making tasks even if the task does not require any significant calculations. Numeracy is a highly related construct to financial literacy, one more commonly used in decision science vs. economic research. This chapter builds on this literature by specifically examining numeracy and financial literacy with a higher-risk group, older consumers, in the area of Medicare product purchases. Although much work has been done on financial literacy, little has been done specifically examining aging, numeracy, and Medicare prescription drug program choice. Our intention is to first review the current literature on aging and health-related decision-making, specifically examining how individual differences in numeracy impact the financial decision-making of older adults, and next highlight its connection and importance to the Medicare Part D program. (PsycINFO Database Record (c) 2016 APA, all rights reserved)