Health Care Management Papers
Document Type
Journal Article
Date of this Version
12-2013
Publication Source
Journal of Health Economics
Volume
32
Issue
6
Start Page
1325
Last Page
1344
DOI
10.1016/j.jhealeco.2013.06.006
Abstract
We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets, focusing on the ability of consumers to evaluate and optimize their choices of plans. Our analysis of administrative data on medical claims in Medicare Part D suggests that fewer than 25% of individuals enroll in plans that are ex ante as good as the least cost plan specified by the Plan Finder tool made available to seniors by the Medicare administration, and that consumers on average have expected excess spending of about $300 per year, or about 15% of expected total out-of-pocket cost for drugs and Part D insurance. These numbers are hard to reconcile with decision costs alone; it appears that unless a sizeable fraction of consumers place large values on plan features other than cost, they are not optimizing effectively.
Copyright/Permission Statement
© . This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Keywords
Medicare, prescription drugs, health insurance demand, administrative data, insurance claims data
Recommended Citation
Heiss, F., Leive, A., McFadden, D., & Winter, J. (2013). Plan Selection in Medicare Part D: Evidence From Administrative Data. Journal of Health Economics, 32 (6), 1325-1344. http://dx.doi.org/10.1016/j.jhealeco.2013.06.006
Included in
Health Economics Commons, Health Services Research Commons, Insurance Commons, Other Medicine and Health Sciences Commons
Date Posted: 27 November 2017
This document has been peer reviewed.