Who Failed to Enroll in Medicare Part D, and Why? Early Results

University of California, Berkeley, Berkeley, California, United States
Health Affairs (Impact Factor: 4.97). 09/2006; 25(5):w344-54. DOI: 10.1377/hlthaff.25.w344
Source: PubMed


Early results on the Medicare Part D prescription drug program, from a survey of people age sixty-five and older who were interviewed just before enrollment started and just after it ended, indicate that Medicare has met its target of 90 percent coverage. Enrollment rates in vulnerable subpopulations-poor health, low income, or cognitive impairment-are almost high enough to offset lower rates of other coverage. However, sizable numbers of elderly people remain uncovered, contrary to their self-interest. Seniors give Part D mixed reviews, and majorities are less satisfied with Medicare and with the government as a result of their experience with this program.

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    • "Abaluck and Gruber (2011) document that the elderlies' health plan choices are not consistent with optimization under full information. Other studies came to similar conclusions (Heiss et al., 2006, 2007, 2009). "
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    ABSTRACT: This paper provides field evidence on (a) how price framing affects consumers’ decision to switch health insurance plans and (b) how the price elasticity of demand for health insurance can be influenced by policymakers through simple regulatory efforts. In 2009, in order to foster competition among health insurance companies, German federal regulation required health insurance companies to express price differences between health plans in absolute Euro values rather than percentage point payroll tax differences. Using individual level panel data, as well as aggregated health plan-level panel data, we find that the reform led to a sixfold increase in an individual’s switching probability and a threefold demand elasticity increase.
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    • "We begin our analysis of the administrative data on Medicare Part D by looking at the enrollment decision; this complements earlier research that used survey data such as Winter et al. (2009) and Heiss et al. (2006, 2009). The Part D program is heavily subsidized, with insurers reimbursed from government general revenues for about 75 percent of overhead and benefits paid out, with fairly tightly regulated formulary and benefit design and competitively determined premiums . "
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    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.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at
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    • "By now, there is a sizable literature in economics and health services research documenting the program's details and providing descriptive statistics on coverage. A number of economic studies have examined the take-up of Part D benefits, (Heiss, McFadden, and Winter, 2006; Levy and Weir, 2008), plan choice (Lucarelli and Simon, 2009; Abaluck and Gruber, 2011); and the extent Part D crowded out other private forms of prescription drug coverage (Levy and Weir, 2008; Engelhardt and Gruber, 2011). The consensus is that the Part D expansion raised prescription drug insurance coverage among the elderly by about 10 percentage points, substantially decreasing the share of the elderly without coverage. "
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    ABSTRACT: 1998 through a grant from the Social Security Administration. The Center's mission is to produce first-class research and forge a strong link between the academic community and decision-makers in the public and private sectors around an issue of critical importance to the nation's future. To achieve this mission, the Center sponsors a wide variety of research projects, transmits new findings to a broad audience, trains new scholars, and broadens access to valuable data sources.
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