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The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies

Claudio Lucarelli, Jeffrey Prince () and Kosali Simon ()

No 14296, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Motivated by widely publicized concerns that there are "too many" plans, we structurally estimate (and validate) an equilibrium model of the Medicare Part D market to study the welfare impacts of two feasible, similar-sized approaches for reducing choice. One reduces the maximum number of firm offerings regionally; the other removes plans providing donut hole coverage - consumers' most valued dimension. We find welfare losses are far smaller when coupled with elimination of a dimension of differentiation, as in the latter approach. We illustrate our findings' relevance under current health care reforms, and consider the merits of instead imposing ex ante competition for entry.

JEL-codes: H42 H51 I11 I18 L13 L51 L88 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias, nep-mic and nep-reg
Note: HC
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Published as Claudio Lucarelli & Jeffrey Prince & Kosali Simon, 2012. "The Welfare Impact Of Reducing Choice In Medicare Part D: A Comparison Of Two Regulation Strategies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1155-1177, November.

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Related works:
Journal Article: THE WELFARE IMPACT OF REDUCING CHOICE IN MEDICARE PART D: A COMPARISON OF TWO REGULATION STRATEGIES (2012) Downloads
Working Paper: The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies (2009) Downloads
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