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Take-up of Medicare Part D: Results From the Health and Retirement Study

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  • Helen Levy
  • David R. Weir

Abstract

We analyze data from the Health and Retirement Study on senior citizens' take-up of Medicare Part D. Take-up among those without drug coverage in 2004 was high; about fifty to sixty percent of this group have Part D coverage in 2006. Only seven percent of senior citizens lack drug coverage in 2006 compared with 24 percent in 2004. We find little circumstantial evidence that Part D crowded out private coverage in the short run, since the persistence of employer coverage was only slightly lower in 2004 -- 2006 than it was in 2002 -- 2004. We find that demand for prescription drugs is the most important determinant of the decision to enroll in Part D among those with no prior coverage. Many of those who remained without coverage in 2006 reported that they do not use prescribed medicines, and the majority had relatively low out-of-pocket spending. Thus, for the most part, Medicare beneficiaries seem to have been able to make economically rational decisions about Part D enrollment despite the complexity of the program. We also find that Part D erased socioeconomic gradients in drug coverage among the elderly.

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File URL: http://hdl.handle.net/10.1093/geronb/gbp107
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Bibliographic Info

Article provided by Gerontological Society of America in its journal Journals of Gerontology Series B: Psychological Sciences and Social Sciences.

Volume (Year): 65B (2010)
Issue (Month): 4 ()
Pages: 492-501

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Handle: RePEc:oup:geronb:v:65b:y:2010:i:4:p:492-501

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  1. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
  2. Todd Elder & Elizabeth Powers, 2006. "Public Health Insurance and SSI Program Participation Among the Aged," Working Papers wp117, University of Michigan, Michigan Retirement Research Center.
  3. Todd E. Elder & Elizabeth T. Powers, 2004. "SSI for the Aged and the Problem of 'Take-Up'," Working Papers wp076, University of Michigan, Michigan Retirement Research Center.
  4. Florian Heiss & Daniel McFadden & Joachim Winter, 2007. "Mind the Gap! Consumer Perceptions and Choices of Medicare Part D Prescription Drug Plans," NBER Working Papers 13627, National Bureau of Economic Research, Inc.
  5. Town, Robert & Liu, Su, 2003. " The Welfare Impact of Medicare HMOs," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 719-36, Winter.
  6. Kathleen McGarry, 1996. "Factors Determining Participation of the Elderly in Supplemental Security Income," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 331-358.
  7. Blundell, Richard & Fry, Vanessa & Walker, Ian, 1987. "Modelling the Take-up of Means-tested Benefits: the Case of Housing Benefits in the United Kingdom," Economic Journal, Royal Economic Society, vol. 98(390), pages 58-74, Supplemen.
  8. Mark Duggan & Patrick Healy & Fiona Scott Morton, 2008. "Providing Prescription Drug Coverage to the Elderly: America's Experiment with Medicare Part D," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 69-92, Fall.
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Cited by:
  1. Heiss, Florian & Leive, Adam & McFadden, Daniel L. & Winter, Joachim, 2013. "Plan selection in Medicare Part D: Evidence from administrative data," Munich Reprints in Economics 19428, University of Munich, Department of Economics.
  2. Gary V. Engelhardt & Jonathan Gruber, 2009. "Medicare Part D and the Financial Protection of the Elderly," Working Papers, Center for Retirement Research at Boston College wp2009-24, Center for Retirement Research, revised Oct 2009.
  3. Vetter, Stefan & Heiss, Florian & McFadden, Daniel & Winter, Joachim, 2013. "Risk attitudes and Medicare Part D enrollment decisions," Economics Letters, Elsevier, vol. 119(2), pages 128-132.
  4. Gary V. Engelhardt & Jonathan Gruber, 2010. "Medicare Part D and the Financial Protection of the Elderly," NBER Working Papers 16155, National Bureau of Economic Research, Inc.
  5. Robert Kaestner & Cuiping Long & G. Caleb Alexander, 2014. "Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D," NBER Working Papers 19948, National Bureau of Economic Research, Inc.
  6. William Encinosa, 2009. "Value-based insurance design in medicare," Applied Health Economics and Health Policy, Springer, vol. 7(3), pages 149-154, September.
  7. Jonathan Gruber & Helen Levy, 2009. "The Evolution of Medical Spending Risk," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 25-48, Fall.

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