IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v105y2015i4p1547-80.html
   My bibliography  Save this article

Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?

Author

Listed:
  • Francesco Decarolis

Abstract

This paper shows how in Medicare Part D insurers' gaming of the subsidy paid to low-income enrollees distorts premiums and raises the program cost. Using plan-level data from the first five years of the program, I find multiple instances of pricing strategy distortions for the largest insurers. Instrumental variable estimates indicate that the changes in a concentration index measuring the manipulability of the subsidy can explain a large share of the premium growth observed between 2006 and 2011. Removing this distortion could reduce the cost of the program without worsening consumer welfare. (JEL G22, H51, I13, I18)

Suggested Citation

  • Francesco Decarolis, 2015. "Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?," American Economic Review, American Economic Association, vol. 105(4), pages 1547-1580, April.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:4:p:1547-80
    Note: DOI: 10.1257/aer.20130903
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.20130903
    Download Restriction: no
    File URL: https://www.aeaweb.org/aer/ds/10504/20130903_ds.zip
    Download Restriction: no
    File URL: https://www.aeaweb.org/aer/data/10504/20130903_data.zip
    Download Restriction: no
    File URL: https://www.aeaweb.org/aer/app/10504/20130903_app.pdf
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:105:y:2015:i:4:p:1547-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.