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Sinking, Swimming, or Learning to Swim in Medicare Part D

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Listed author(s):
  • Ketcham, Jonathan D.
  • Lucarelli, Claudio
  • Miravete, Eugenio J
  • Roebuck, M Christopher

Abstract

Under Medicare Part D, senior citizens choose prescription drug insurance off red by numerous private insurers. We examine non-poor enrollees' actions in 2006 and 2007 using panel data. Our sample reduced overspending by $298 on average, with gains by 81% of them. The greatest improvements were by those who overspent most in 2006 and by those who switched plans. Decisions to switch depended on individuals' overspending in 2006 and on individual-specific effects of changes in their current plans. The oldest consumers and those initiating medications for Alzheimer's disease improved by more than average, suggesting that real-world institutions help overcome cognitive limitations.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8585.

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Date of creation: Sep 2011
Handle: RePEc:cpr:ceprdp:8585
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Keywords: Insurance Plan Switching; Overspending; Prescription Drugs;

Other versions of this item:

Find related papers by JEL classification:
  • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
  • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
  • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
  • I10 - Health, Education, and Welfare - - Health - - - General
  • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
  • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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  1. List John A. & Millimet Daniel L, 2008. "The Market: Catalyst for Rationality and Filter of Irrationality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-55, November.
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  9. 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.
  10. 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.
  11. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
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  16. Jeffrey Liebman & Richard Zeckhauser, 2008. "Simple Humans, Complex Insurance, Subtle Subsidies," NBER Working Papers 14330, National Bureau of Economic Research, Inc.
  17. Florian Heiss & Daniel McFadden & Joachim Winter, 2010. "Mind the Gap! Consumer Perceptions and Choices of Medicare Part D Prescription Drug Plans," NBER Chapters,in: Research Findings in the Economics of Aging, pages 413-481 National Bureau of Economic Research, Inc.
  18. Stefano DellaVigna & Ulrike Malmendier, 2006. "Paying Not to Go to the Gym," American Economic Review, American Economic Association, vol. 96(3), pages 694-719, June.
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