Full Citation

Title: Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?

Citation Type: Journal Article

Publication Year: 2015

ISBN:

ISSN:

DOI: 10.1257/aer.20130903

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Abstract: This paper shows how in Medicare Part D insurers' gaming of the subsidy paid to low-income enrollees distorts premiums and raises the program cost. Using plan-level data from the first five years of the program, I find multiple instances of pricing strategy distortions for the largest insurers. Instrumental variable estimates indicate that the changes in a concentration index measuring the manipulability of the subsidy can explain a large share of the premium growth observed between 2006 and 2011. Removing this distortion could reduce the cost of the program without worsening consumer welfare.

Url: http://pubs.aeaweb.org/doi/10.1257/aer.20130903

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Authors: Decarolis, Francesco

Periodical (Full): American Economic Review

Issue: 4

Volume: 105

Pages: 1547-1580

Data Collections: IPUMS USA

Topics: Other, Population Health and Health Systems

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