More options are bad?

Posted by Nolan Miller on Aug 31, 2011

Filed Under (Health Care)

One of the bedrock principles of standard economics is that choices are good.  The simple version of the argument goes like this.  If I offer you a choice between an apple and a banana, increasing the options so that you can now choose an apple, a banana, or an orange must make you better off.  Since in the second case you can choose anything you would have chosen in the first (i.e., apple or banana), but you can now also choose an orange if you prefer it, it must be that the adding the option to choose an orange makes you better off.  Or so the simple argument goes.

While this argument has a certain intuitive appeal, recent evidence of poor decision making when faced with multiple options suggest that choices, while good in theory, may lead to poor decisions and thus be bad in practice.  One such study (written by J. Michael McWilliams, Christopher Afendulis, Thomas McGuire and Bruce Landon) just appeared in the online edition of the health policy journal Health Affairs.  The authors of the study consider seniors’ decisions about whether to enroll in Medicare Advantage, the HMO-like system that runs alongside traditional Medicare.  For seniors in the U.S., the default decision is to participate in “traditional Medicare,” the plan where seniors go to whatever doctors they like and the government pays the bills.  But, they also have the option to choose to enroll in a Medicare Advantage plans.  In exchange for accepting some limits on which providers they can see (or financial consequences for choosing out-of-network providers), Medicare Advantage plans often provide additional benefits, such as prescription drug coverage, vision or dental benefits, or else reduce their patients’ out-of-pocket costs of care.  These plans differ in their networks and in the portfolio of benefits they offer and may or may not appeal to any particular senior.

The standard “choices are good” argument would seem to apply here.  The more Medicare Advantage plans are available to a particular senior, the greater the chance that she will prefer one to traditional Medicare.  So, the likelihood of enrolling in Medicare Advantage should increase as the number of participating plans increases.  The Health Affairs study finds that this is, in fact the case, but only up to a point.  Increasing the number of plans available to a person tended to increase enrollment in Medicare Advantage, but only if there were fewer than around fifteen plans available.  When there were between fifteen and thirty plans available, additional options did not affect enrollment, and when there were more than thirty plans available, increasing the number of options available actually decreased enrollment in Medicare Advantage.  This tendency for additional options to reduce enrollment was particularly pronounced for participants with decreased cognitive abilities, consistent with the contention that when the choices facing a person become too complex, they tend to make worse decisions.

Lest you think that “choices are bad” only applies to the elderly, another such example comes from a 1995 study by Donald Redelmeier and Eldar Shafir that appeared in the Journal of the American Medical Association.  

In the study, a group of family physicians were presented with two different scenarios:

Scenario 1:  The patient is a 67-year-old farmer with chronic right hip pain. The diagnosis is osteoarthritis. You have tried several nonsteroidal anti-inflammatory agents (e.g., aspirin, naproxen, and ketoprofen) and have stopped them because of either adverse effects or lack of efficacy. You decide to refer him to an orthopedic consultant for consideration for hip replacement surgery. The patient agrees to this plan. Before sending him away, however, you check the drug formulary and find that there is one nonsteroidal medication that this patient has not tried (ibuprofen). What do you do?

The second scenario was the same as scenario 1, except the underlined phrase was replaced with “two nonsteroidal medications that this patient has not tried (ibuprofen and prixicam).”

Now, if more options are good, what we should have seen was that the doctors should be more likely to pull back the referral and try another drug in the second case than in the first.  After all, if you would pull the referral and try ibuprofen, then you should certainly pull the referral if you can try ibuprofen or prixicam.  However, the doctors behaved quite differently.  While 53% of physicians choose to refer the patient under scenario 1, 72% choose to refer the patient under scenario 2.  (The study reports similar results for other decision making scenarios.)  It seems that the doctors, faced with the additional task of thinking through whether to treat the patient with ibuprofen or prixicam after pulling the referral, simply decided to avoid the issue by continuing to refer the patient.  Just as in the case of Medicare Advantage plan choice discussed above, when faced with a difficult or complicated choice, decision makers responded by avoiding the effort of figuring out the right answer and simply going with the default option.

Studies such as these are disturbing on many levels, not the least of which because they shake our confidence in the basic principle that options are good.  If increasing a person’s available options is not good, then we need to think hard about which options we should offer them and which we should suppress.  Decisions like this, which involve making judgments about the kind of information others would find useful are value-laden and inherently difficult.  In light of this, the above studies suggest that the most likely response will be to stop offering people choices altogether.  Wait, that can’t be good either.