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The value of coverage in the medicare advantage insurance market

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  • Dunn, Abe
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Abstract

Abstract This paper examines the impact of coverage on demand for health insurance in the Medicare Advantage (MA) insurance market. Estimating the effects of coverage on demand poses a challenge for researchers who must consider both the hundreds of benefits that affect out-of-pocket costs (OOPC) to consumers, but also the endogeneity of coverage. These problems are addressed in a discrete choice demand model by employing a unique measure of OOPC that considers a consumer's expected payments for a fixed bundle of health services and applying instrumental variable techniques to address potential endogeneity bias. The results of the demand model show that OOPC have a significant effect on consumer surplus and that not instrumenting for OOPC results in a significant underestimate of the value of coverage.

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File URL: http://www.sciencedirect.com/science/article/B6V8K-50W1T8J-1/2/770eb37507db6d376902138512d1d0ca
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 29 (2010)
Issue (Month): 6 (December)
Pages: 839-855

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Handle: RePEc:eee:jhecon:v:29:y:2010:i:6:p:839-855

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Medicare advantage Health insurance Demand Consumer surplus;

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References

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Cited by:
  1. Abe Dunn, 2009. "Does Competition Among Medicare Advantage Plans Matter?: An Empirical Analysis of the Effects of Local Competition in a Regulated Environment," EAG Discussions Papers 200905, Department of Justice, Antitrust Division.

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