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Plan Selection in Medicare Part D: Evidence from Administrative Data

Florian Heiss, Adam Leive, Daniel McFadden and Joachim Winter ()

No 18166, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets, focusing on the ability of consumers to evaluate and optimize their choices of plans. Our analysis of administrative data on medical claims in Medicare Part D suggests that less than 10 percent of individuals enroll in plans that are ex post optimal with respect to total cost (premiums and co-payments). Relative to the benchmark of a static decision rule, similar to the Plan Finder provided by the Medicare administration, that conditions next year's plan choice only on the drugs consumed in the current year, enrollees lost on average about $300 per year. These numbers are hard to reconcile with decision costs alone; it appears that unless a sizeable fraction of consumers value plan features other than cost, they are not optimizing effectively.

JEL-codes: C25 D12 H51 I11 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ias
Date: 2012-06
Note: AG HE
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Published as Heiss, Florian & Leive, Adam & McFadden, Daniel & Winter, Joachim, 2013. "Plan selection in Medicare Part D: Evidence from administrative data," Journal of Health Economics, Elsevier, vol. 32(6), pages 1325-1344.

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Journal Article: Plan selection in Medicare Part D: Evidence from administrative data (2013) Downloads
Working Paper: Plan selection in Medicare Part D: Evidence from administrative data (2013)
Working Paper: Plan Selection in Medicare Part D: Evidence from administrative Data (2012) Downloads
Working Paper: Plan selection in Medicare Part D: Evidence from administrative data (2012) Downloads
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