scholarly journals Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program

2011 ◽  
Vol 101 (4) ◽  
pp. 1180-1210 ◽  
Author(s):  
Jason Abaluck ◽  
Jonathan Gruber
Keyword(s):  
Prescription Drug ◽  
No Value ◽  
Medicare Part D ◽  
The Elderly ◽  
Medicare Part ◽  
Part D ◽  
Plan Choice ◽  
Choice Sets ◽  
Prescription Drug Plan ◽  
Financial Characteristics

We evaluate the choices of elders across their insurance options under the Medicare Part D Prescription Drug plan, using a unique dataset of prescription drug claims matched to information on the characteristics of choice sets. We document that elders place much more weight on plan premiums than on expected out-of-pocket costs; value plan financial characteristics beyond any impacts on their own financial expenses or risk; and place almost no value on variance-reducing aspects of plans. Partial equilibrium welfare analysis implies that welfare would have been 27 percent higher if patients had all chosen rationally. (JEL D12, I11, J14)

scholarly journals Patient Experiences in Selecting a Medicare Part D Prescription Drug Plan

2016 ◽  
Vol 3 (3) ◽  
pp. 207
Author(s):  
Cheryl D Stults ◽  
Alison Baskin ◽  
Ming Tai-Seale ◽  
M. Kate Bundorf
Keyword(s):  
Prescription Drug ◽  
Medicare Part D ◽  
Patient Experiences ◽  
Medicare Part ◽  
Part D ◽  
Drug Plan ◽  
Prescription Drug Plan

The Impact Of Medicare Part D On Prescription Drug Use By The Elderly

2007 ◽  
Vol 26 (6) ◽  
pp. 1735-1744 ◽  
Author(s):  
Frank R. Lichtenberg ◽  
Shawn X. Sun
Keyword(s):  
Drug Use ◽  
Prescription Drug ◽  
Medicare Part D ◽  
The Elderly ◽  
Medicare Part ◽  
Part D ◽  
Prescription Drug Use ◽  
The Impact

scholarly journals Heterogeneity in Choice Inconsistencies among the Elderly: Evidence from Prescription Drug Plan Choice

2011 ◽  
Vol 101 (3) ◽  
pp. 377-381 ◽  
Author(s):  
Jason Abaluck ◽  
Jonathan Gruber
Keyword(s):  
Cost Savings ◽  
The Elderly ◽  
Potential Cost ◽  
Part D ◽  
Plan Choice ◽  
Choice Sets ◽  
Drug Expenditures ◽  
Prescription Drug Plan ◽  
Risk Protection ◽  
Out Of Pocket Costs

This paper investigates the degree to which choice inconsistencies documented in the context of Medicare Part D plan choice vary across consumers and geographic regions. Our main finding is that there is surprisingly little variation: regardless of age, gender, predicted drug expenditures or the predictability of drug demand consumers underweight out of pocket costs relative to premiums and fail to consider the individualized consequences of plan characteristics; as a result, they frequently choose plans which are dominated in the sense that an alternative plan provides better risk protection at a lower cost. We find limited evidence that the sickest individuals had more difficulty with plan choice, and we document that much of the variation in potential cost savings across states comes from variation in choice sets, not variation in consumers ability to choose.

scholarly journals Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange

2014 ◽  
Vol 6 (1) ◽  
pp. 38-64 ◽  
Author(s):  
Keith M. Marzilli Ericson
Keyword(s):  
Prescription Drug ◽  
Medicare Part D ◽  
Medicare Part ◽  
Regression Discontinuity Design ◽  
Part D ◽  
Drug Insurance ◽  
Plan Choice ◽  
Complete Set ◽  
Prescription Drug Insurance ◽  
Enrollment Data

I use the Medicare Part D prescription drug insurance market to examine the dynamics of firm interaction with consumers on an insurance exchange. Enrollment data show that consumers face switching frictions leading to inertia in plan choice, and a regression discontinuity design indicates initial defaults have persistent effects. In the absence of commitment to future prices, theory predicts firms respond to inertia by raising prices on existing enrollees, while introducing cheaper alternative plans. The complete set of enrollment and price data from 2006 through 2010 confirms this prediction: older plans have approximately 10 percent higher premiums than comparable new plans. (JEL G22, I13, I18, L11, L65)

scholarly journals Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment

2016 ◽  
Vol 106 (12) ◽  
pp. 3932-3961 ◽  
Author(s):  
Jonathan D. Ketcham ◽  
Nicolai V. Kuminoff ◽  
Christopher A. Powers
Keyword(s):  
Utility Maximization ◽  
Medicare Part D ◽  
The Elderly ◽  
Nonparametric Tests ◽  
Medicare Part ◽  
Enrollment Decisions ◽  
Part D ◽  
Plan Choice ◽  
Out Of Sample ◽  
Validation Tests

Consumers' enrollment decisions in Medicare Part D can be explained by Abaluck and Gruber's (2011) model of utility maximization with psychological biases or by a neoclassical version of their model that precludes such biases. We evaluate these competing hypotheses by applying nonparametric tests of utility maximization and model validation tests to administrative data. We find that 79 percent of enrollment decisions from 2006 to 2010 satisfied basic axioms of consumer theory under the assumption of full information. The validation tests provide evidence against widespread psychological biases. In particular, we find that precluding psychological biases improves the structural model's out-of-sample predictions for consumer behavior. (JEL C52, D12, I13, I18, J14)

scholarly journals Medicare Part D and the Financial Protection of the Elderly

2011 ◽  
Vol 3 (4) ◽  
pp. 77-102 ◽  
Author(s):  
Gary V Engelhardt ◽  
Jonathan Gruber
Keyword(s):  
Prescription Drug ◽  
Insurance Coverage ◽  
Medicare Part D ◽  
The Elderly ◽  
Medical Expenditure ◽  
Medicare Part ◽  
Part D ◽  
Drug Insurance ◽  
Crowd Out ◽  
Prescription Drug Insurance

We examine the impact of the expansion of public prescription-drug insurance coverage from Medicare Part D and find evidence of substantial crowd-out. Using the 2002–2007 waves of the Medical Expenditure Panel Survey, we estimate the extension of Part D benefits resulted in 75 percent crowd-out of both prescription-drug insurance coverage and expenditures of those 65 and older. Part D is associated with sizeable reductions in out-of-pocket spending, much of which has accrued to a small proportion of the elderly. On average, we estimate a welfare gain from Part D comparable to the deadweight cost of program financing. (JEL H51, I18, J14)

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