Pricing and Incentives in Publicly Subsidized Health Care Markets: the Case of Medicare Part D

Francesco Decarolis

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: In Medicare Part D, low income individuals receive subsidies to enroll into insurance plans. This paper studies how premiums are distorted by the combined effects of this subsidy and the default assignment of low income enrollees into plans. Removing this distortion could reduce the cost of the program without worsening consumers' welfare. Using data from the the first five years of the program, an econometric model is used to estimate consumers demand for plans and to compute what premiums would be without the subsidy distortion. Preliminary estimates suggest that the reduction in premiums of affected plans would be substantial.

Keywords: Medicare; prescription drugs; health insurance demand; auctions (search for similar items in EconPapers)
JEL-codes: D44 H57 I11 I18 L22 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2012-06-30
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:12-026

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