סיור לימודי של אהבה
סמינר באסטרטגיה בשיתוף עם בית ספר לכלכלה
The Response of Drug Expenditure to Contract Design in Medicare Part D
Liran Einav, Department of Economics, Stanford University
21 במרץ 2013, 14:15
Berglas Building, room 101
| Abstract | |
| We use data on prescription drug claims in Medicare plan D to estimate the effect of insurance coverage on prescription drug utilization, and how it may be affected by the non-linearity of the contract design. We start by presenting two pieces of qualitative evidence. First, consistent with moral hazard, we document significant bunching of annual spending at the coverage kink point, where the famous Medicare part D `donut hole` begins (where insurance becomes discontinuously much less generous on the margin). Second, we utilize variation in the birth month of beneficiaries, which leads to variation in coverage duration during the first year of eligibility, to show that individuals also respond to the non-linearity of the contract. Motivated by these two facts, the second part of the paper develops a simple dynamic model of prescription drug utilization during the coverage year to quantify the effect of coverage on utilization. `Preliminary` results suggest that the effect is economically significant, although perhaps not very large. For example, `filling` the donut hole would increase overall spending by about 10 percent. | |
