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

2009 ◽  
Author(s):  
Jason Abaluck ◽  
Jonathan Gruber
Keyword(s):  
Medicare Part D ◽  
The Elderly ◽  
Medicare Part ◽  
Part D ◽  
Plan Choice

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 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)

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 Inattention and Switching Costs as Sources of Inertia in Medicare Part D

2021 ◽  
Vol 111 (9) ◽  
pp. 2737-2781
Author(s):  
Florian Heiss ◽  
Daniel McFadden ◽  
Joachim Winter ◽  
Amelie Wuppermann ◽  
Bo Zhou
Keyword(s):  
Data Model ◽  
Switching Costs ◽  
Medicare Part D ◽  
Medicare Part ◽  
Part D ◽  
Plan Choice ◽  
Using Data ◽  
Two Stages ◽  
Ability And Willingness ◽  
Over Time

Consumers’ health plan choices are highly persistent even though optimal plans change over time. This paper separates two sources of inertia, inattention to plan choice and switching costs. We develop a panel data model with separate attention and choice stages, linked by heterogeneity in acuity, i.e., the ability and willingness to make diligent choices. Using data from Medicare Part D, we find that inattention is an important source of inertia but switching costs also play a role, particularly for low-acuity individuals. Separating the two stages and allowing for heterogeneity is crucial for counterfactual simulations of interventions that reduce inertia. (JEL D12, G22, H51, I13, I18, L65)

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)

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