Predicting risk selection following major changes in medicare
AbstractThe Medicare Modernization Act of 2003 created several new types of private insurance plans within Medicare, starting in 2006. Some of these plan types previously did not exist in the commercial market and there was great uncertainty about their prospects. In this paper, we show that statistical models and historical data from the Medicare Current Beneficiary Survey can be used to predict the experience of new plan types with reasonable accuracy. This lays the foundation for the analysis of program modifications currently under consideration. We predict market share, risk selection, and stability for the most prominent new plan type, the stand-alone Medicare prescription drug plan (PDP). First, we estimate a model of consumer choice across Medicare insurance plans available in the data. Next, we modify the data to include PDPs and use the model to predict the probability of enrollment for each beneficiary in each plan type. Finally, we calculate mean-adjusted actual spending by plan type. We predict that adverse selection into PDPs will be substantial, but that enrollment and premiums will be stable. Our predictions correspond well to actual experience in 2006. Copyright © 2007 John Wiley & Sons, Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Health Economics.
Volume (Year): 17 (2008)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gary L. Hunt, 2000. "Alternative Nested Logit Model Structures and the Special Case of Partial Degeneracy," Journal of Regional Science, Wiley Blackwell, vol. 40(1), pages 89-113.
- Austin B. Frakt & Steven D. Pizer, 2010. "Beneficiary price sensitivity in the Medicare prescription drug plan market," Health Economics, John Wiley & Sons, Ltd., vol. 19(1), pages 88-100.
- Pizer, Steven D. & Prentice, Julia C., 2011. "Time is money: Outpatient waiting times and health insurance choices of elderly veterans in the United States," Journal of Health Economics, Elsevier, vol. 30(4), pages 626-636, July.
- Steven Pizer & Austin Frakt & Roger Feldman, 2009. "Nothing for something? Estimating cost and value for beneficiaries from recent medicare spending increases on HMO payments and drug benefits," International Journal of Health Care Finance and Economics, Springer, vol. 9(1), pages 59-81, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.