American Economic Review Vol. 105 No. 1 2015

Paying Attention or Paying Too Much in Medicare Part D

Jonathan D. Ketcham¹; Claudio Lucarelli²; Christopher A. Powers³

¹ Department of Marketing, W.P. Carey School of Business, Arizona State University, Box 874106, Tempe, AZ 85287-4106 (e-mail: ) · ² School of Business and Economics, Universidad de los Andes, Mons. Alvaro del Portillo 12455, Santiago, Chile, and Leonard Davis Institute of Health Economics (e-mail: ) · ³ Office of Information Products and Data Analytics, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Mailstop B2-29-04, Baltimore, MD 21244 (e-mail: ).

Abstract

We study whether people became less likely to switch Medicare prescription drug plans (PDPs) due to more options and more time in Part D. Panel data for a random 20 percent sample of enrollees from 2006--2010 show that 50 percent were not in their original PDPs by 2010. Individuals switched PDPs in response to higher costs of their status quo plans, saving them money. Contrary to choice overload, larger choice sets increased switching unless the additional plans were relatively expensive. Neither switching overall nor responsiveness to costs declined over time, and above-minimum spending in 2010 remained below the 2006 and 2007 levels.

DOI

10.1257/aer.20120651

Volume

105

Issue

1

Pages

204-233

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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