IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v18y2009i8p921-931.html
   My bibliography  Save this article

Should healthy Medicare beneficiaries postpone enrollment in Medicare Part D?

Author

Listed:
  • Adam Atherly

    (Department of Health Policy and Management, Rollins School of Public Health, Emory University, Atlanta, GA, USA)

  • Bryan Dowd

    (Department of Health Policy and Management, School of Public Health, University of Minnesota, Minneapolis, MN, USA)

Abstract

We compare estimated lifetime out-of-pocket prescription drug expenditures on outpatient prescription drugs, premiums and late enrollment penalties for healthy 65-year-old Medicare beneficiaries if they (a) purchase Part D as soon as they are eligible versus (b) waiting until they contract a drug-intensive condition. Using data from the Medicare Current Beneficiary Survey, a representative sample of the Medicare population, we estimate the annual probability that a healthy 65-year-old will transition to a drug-intensive health state or death. We then use Monte Carlo simulations to estimate expected lifetime prescription drug spending with and without drug insurance. We find that for the statutory minimum benefit policy with a $30 per month premium, lifetime expected expenditures are about 10% higher for women and 6.5% higher for men if healthy beneficiaries postpone enrollment in Part D. Eliminating the late enrollment penalty would create a significant cost advantage for postponed enrollment, particularly for men. Under current rules, the financial advantage of early enrollment coupled with the reduction in risk associated with purchasing Part D plans and potential utility gains from insurance-induced drug consumption, suggests that immediate purchase of Part D is the optimal choice for Medicare beneficiaries. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Adam Atherly & Bryan Dowd, 2009. "Should healthy Medicare beneficiaries postpone enrollment in Medicare Part D?," Health Economics, John Wiley & Sons, Ltd., vol. 18(8), pages 921-931.
  • Handle: RePEc:wly:hlthec:v:18:y:2009:i:8:p:921-931
    DOI: 10.1002/hec.1413
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/hec.1413
    File Function: Link to full text; subscription required
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:aph:ajpbhl:1997:87:10:1626-1629_4 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    More about this item

    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:wly:hlthec:v:18:y:2009:i:8:p:921-931. 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: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.