The Value of Coverage in the Medicare Advantage Insurance Market

Abe Dunn

BEA Working Papers from 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 effects of coverage on demand poses a challenge for researchers who must must consider both the hundreds of benefits that affect 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 fixed 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 significant effect on consumer surplus and that not instrumenting for OOPC results in a significant underestimate of the value of coverage.

JEL-codes: E6 (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in nep-hea, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: The value of coverage in the medicare advantage insurance market (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bea:wpaper:0061

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