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The value of Medicare managed care plans and their prescription drug benefits

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  • Anne E. Hall

Abstract

I estimate the welfare, both gross and net, provided by the Medicare managed care program in 1999 through 2002. First, I estimate a model of demand for the benefits offered by managed care plans to Medicare beneficiaries. I then use the demand estimates to form estimates of welfare provided by the program. Medicare beneficiaries derived $14.9 billion of gross welfare per year from the Medicare HMO program. Depending on the amount of selection in the program, the Medicare managed care program provided from -$10.3 billion to $35.1 billion of net welfare total over the four-year period. I also estimate the welfare that beneficiaries receive from the prescription drug benefits offered by Medicare HMOs. HMO enrollees in plans offering drugs received on average $13 of consumer surplus per month from the drug benefits in 1999, and this estimate drops to $10 by 2002.

Suggested Citation

  • Anne E. Hall, 2007. "The value of Medicare managed care plans and their prescription drug benefits," Finance and Economics Discussion Series 2007-19, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2007-19
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    References listed on IDEAS

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    Cited by:

    1. Duggan, Mark & Starc, Amanda & Vabson, Boris, 2016. "Who benefits when the government pays more? Pass-through in the Medicare Advantage program," Journal of Public Economics, Elsevier, vol. 141(C), pages 50-67.

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    Keywords

    Medicare; Medical care;

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