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The Value of Coverage in the Medicare Advantage Insurance Market

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  • Abe Dunn

    (Bureau of Economic Analysis)

Abstract

This paper examines the impact of coverage on demand for health insurance in the Medicare Advantage (MA) insurance market. Estimating the e¤ects of coverage on demand poses a challenge for researchers who must must consider both the hundreds of bene.ts that a¤ect out-of-pocket costs (OOPC) to consumers, but also the endogeneity of coverage. These problems are addressed in a discrete choice demand model by employing a unique measure of OOPC that considers a consumer.s expected payments for a .xed bundle of health services and applying instrumental variable techniques to address potential endogneity bias. The results of the demand model show that OOPC have a signi.cant e¤ect on consumer surplus and that not instrumenting for OOPC results in a signi.cant underestimate of the value of coverage.

Suggested Citation

  • Abe Dunn, 2010. "The Value of Coverage in the Medicare Advantage Insurance Market," BEA Working Papers 0061, Bureau of Economic Analysis.
  • Handle: RePEc:bea:wpaper:0061
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    References listed on IDEAS

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    Cited by:

    1. Afendulis, Christopher C. & Sinaiko, Anna D. & Frank, Richard G., 2015. "Dominated choices and Medicare Advantage enrollment," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 72-83.
    2. Christopher Afendulis & Anna Sinaiko & Richard Frank, 2014. "Dominated Choices and Medicare Advantage Enrollment," NBER Working Papers 20181, National Bureau of Economic Research, Inc.
    3. Abe Dunn, 2009. "Does Competition Among Medicare Advantage Plans Matter?: An Empirical Analysis of the Effects of Local Competition in a Regulated Environment," EAG Discussions Papers 200905, Department of Justice, Antitrust Division.
    4. Hall Anne E, 2011. "Measuring the Return on Government Spending on the Medicare Managed Care Program," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-43, January.
    5. Karen Stockley & Thomas McGuire & Christopher Afendulis & Michael E. Chernew, 2014. "Premium Transparency in the Medicare Advantage Market: Implications for Premiums, Benefits, and Efficiency," NBER Working Papers 20208, National Bureau of Economic Research, Inc.
    6. Marika Cabral & Michael Geruso & Neale Mahoney, 2014. "Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage," NBER Working Papers 20470, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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