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American Economic Review Vol. 102 No. 6 2012

Sinking, Swimming, or Learning to Swim in Medicare Part D

Jonathan D. Ketcham1; Claudio Lucarelli2; Eugenio J. Miravete3; M. Christopher Roebuck4

1 Arizona State University, W. P. Carey School of Business, Department of Marketing, Box 874106, Tempe, AZ 85287-4106. · 2 Cornell University, Department of Public Policy and Management, 105 MVR Hall, Ithaca, NY 14853, Leonard Davis Institute of Health Economics, Philadelphia, PA, and Universidad de los Andes, Chile. · 3 The University of Texas at Austin, Department of Economics, 1 University Station C3100, Austin, TX 78712-0301, and CEPR. · 4 RXEconomics, 11350 McCormick Rd., #705, Hunt Valley, MD 21031-1002

Abstract

Under Medicare Part D, senior citizens choose prescription drug insurance offered by numerous private insurers. We examine nonpoor enrollees' actions in 2006 and 2007 using panel data. Our sample reduced overspending by $298 on average, with gains by 81 percent 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.

DOI
10.1257/aer.102.6.2639
Volume
102
Issue
6
Pages
2639-2673
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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