The Correlates of Cost-Conscious Behavior Among Elderly Consumers of Health Care Services

Congress and the president have taken a number of steps to control Medicare costs, including shifting Medicare reimbursement to prospective payment based on diagnosis-related groups (DRGs) and increasing the coinsurance and deductible payments (cost sharing) required of Medicare enrollees. The cost-sharing approach assumes that elderly consumers, when faced by the potential for increased out-of-pocket expenditures, will curtail unnecessary use of health services and shop for services and products using price as a guide. Interviews with 398 noninstitution-alized Medicare enrollees determined the extent to which their behavior as consumers of health services meets the expectations of the cost-sharing approach. The mean score of 2.08 on a 12-item market behavior index indicates that most elderly respondents failed to engage m cost-conscious behaviors. Higher scores on the index were correlated with measures of the time costs associated with obtaining health services and satisfaction with the quality of care. The enactment of Medicare and Medicaid in 1965 marked the federal government’s assumption of primary responsibility for protecting the retirement incomes and health of older persons by helping them meet their medical expenses. Although policymakers never clearly defined the exact parameters of this commitment, it apparently rested on two beliefs: that medical care should be available whenever needed and that costs should not be considered whenever health or life were at stake. Recently, concern with rising health care costs, the growth of Medicare AUTHOR’S NOTE: This article was funded by a grant from the AARP/Andru