IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Suit the action to the word, the word to the action: Hypothetical choices and real decisions in Medicare Part D

  • Kesternich, Iris
  • Heiss, Florian
  • McFadden, Daniel
  • Winter, Joachim

In recent years, consumer choice has become an important element of public policy. One reason is that consumers differ in their tastes and needs, which they can express most easily through their own choices. Elements that strengthen consumer choice feature prominently in the design of public insurance markets, for instance in the United States in the recent introduction of prescription drug coverage for older individuals via Medicare Part D. For policy makers who design such a market, an important practical question in the design phase of such a new program is how to deduce enrollment and plan selection preferences prior to its introduction. In this paper, we investigate whether hypothetical choice experiments can serve as a tool in this process. We combine data from hypothetical and real plan choices, elicited around the time of the introduction of Medicare Part D. We first analyze how well the hypothetical choice data predict willingness to pay and market shares at the aggregate level. We then analyze predictions at the individual level, in particular how insurance demand varies with observable characteristics. We also explore whether the extent of adverse selection can be predicted using hypothetical choice data alone.

If 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.

File URL: http://www.sciencedirect.com/science/article/pii/S0167629612001798
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

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

Volume (Year): 32 (2013)
Issue (Month): 6 ()
Pages: 1313-1324

as
in new window

Handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1313-1324
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505560

References listed on IDEAS
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.:

as in new window
  1. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  2. Daniel McFadden, 2001. "Economic Choices," American Economic Review, American Economic Association, vol. 91(3), pages 351-378, June.
  3. Heiss, Florian & Leive, Adam & McFadden, Daniel & Winter, Joachim, 2012. "Plan Selection in Medicare Part D: Evidence from administrative Data," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 384, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Florian Heiss & Daniel McFadden & Joachim Winter, 2009. "Regulation of private health insurance markets: Lessons from enrollment, plan type choice, and adverse selection in Medicare Part D," NBER Working Papers 15392, National Bureau of Economic Research, Inc.
  5. Kesternich, Iris & Heiss, Florian & McFadden, Daniel L. & Winter, Joachim, 2013. "Suit the action to the word, the word to the action: Hypothetical choices and real decisions in Medicare Part D," Munich Reprints in Economics 19474, University of Munich, Department of Economics.
  6. Balistreri, Edward J. & Poe, Gregory L. & McClelland, Gary H. & Schulze, William D., 1996. "Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values," Working Papers 127865, Cornell University, Department of Applied Economics and Management.
  7. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, 03.
  8. David Reiley & John List, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  9. Daniel McFadden, 1976. "The Revealed Preferences of a Government Bureaucracy: Empirical Evidence," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 55-72, Spring.
  10. Jae Bong Chang & Jayson L. Lusk & F. Bailey Norwood, 2007. "How Closely Do Hypothetical Surveys and Laboratory Experiments Predict Field Behavior?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 518-534.
  11. Florian Heiss & Daniel McFadden & Joachim Winter, 2011. "The Demand for Medicare Part D Prescription Drug Coverage: Evidence from Four Waves of the Retirement Perspectives Survey," NBER Chapters, in: Explorations in the Economics of Aging, pages 159-182 National Bureau of Economic Research, Inc.
  12. Daniel McFadden & Joachim Winter & Florian Heiss, 2008. "Consumer-Directed Health Care: Can Consumers Look After Themselves?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(III), pages 285-307, September.
  13. 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.
  14. Jeffrey R. Kling & Sendhil Mullainathan & Eldar Shafir & Lee C. Vermeulen & Marian V. Wrobel, 2012. "Comparison Friction: Experimental Evidence from Medicare Drug Plans," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 199-235.
  15. Manski, Charles F, 1999. "Analysis of Choice Expectations in Incomplete Scenarios," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 49-66, December.
  16. Jason Abaluck & Jonathan Gruber, 2011. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program," American Economic Review, American Economic Association, vol. 101(4), pages 1180-1210, June.
  17. Jayson L. Lusk & Ted C. Schroeder, 2004. "Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 467-482.
  18. Claudio Lucarelli & Jeffrey Prince & Kosali Simon, 2008. "The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies," NBER Working Papers 14296, National Bureau of Economic Research, Inc.
  19. Heiss, Florian & McFadden, Daniel L. & Winter, Joachim, 2006. "Who failed to enroll in Medicare Part D, and why? Early results," Munich Reprints in Economics 19427, University of Munich, Department of Economics.
  20. Wise, David A. (ed.), 2011. "Explorations in the Economics of Aging," National Bureau of Economic Research Books, University of Chicago Press, number 9780226903378.
  21. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
  22. Bohm, Peter, 2008. "Field-test Elicitations of Demand for Public Goods," Handbook of Experimental Economics Results, Elsevier.
  23. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
  24. Gro Steine & Kari Kolstad, 2006. "Consumers' Willingness to Pay for the Color of Salmon: A Choice Experiment with Real Economic Incentives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1050-1061.
  25. Alfnes, Frode & Guttormsen, Atle G. & Steine, Gro & Kolstad, Kari, 2006. "Ajae Appendix: Consumers’ Willingness To Pay For The Color Of Salmon: A Choice Experiment With Real Economic Incentives," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 88(4), November.
  26. John List & Michael Taylor & Paramita Sinha, 2006. "Using choice experiments to value non-market goods and services: Evidence from field experiments," Natural Field Experiments 00278, The Field Experiments Website.
  27. repec:cup:cbooks:9780521788304 is not listed on IDEAS
  28. 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.
  29. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  30. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1313-1324. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.