DP8585 Sinking, Swimming, or Learning to Swim in Medicare Part D
|Author(s):||Jonathan D. Ketcham, Claudio Lucarelli, Eugenio J Miravete, M Christopher Roebuck|
|Publication Date:||September 2011|
|Keyword(s):||Insurance Plan Switching, Overspending, Prescription Drugs|
|JEL(s):||D01, D8, H51, I10, I11, I18|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8585|
Under Medicare Part D, senior citizens choose prescription drug insurance offred by numerous private insurers. We examine non-poor enrollees' actions in 2006 and 2007 using panel data. Our sample reduced overspending by $298 on average, with gains by 81% of them. The greatest improvements were by those who overspent most in 2006 and by those who switched plans. Decisions to switch depended on individuals' overspending in 2006 and on individual-specific effects of changes in their current plans. The oldest consumers and those initiating medications for Alzheimer's disease improved by more than average, suggesting that real-world institutions help overcome cognitive limitations.