The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
42 Pages Posted: 11 Aug 2008 Last revised: 13 May 2014
There are 2 versions of this paper
The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
Date Written: April 2011
Abstract
Motivated by widely publicized concerns that there are “too many” plans, we structurally estimate (and validate) an equilibrium model of the Medicare Part D market to study the welfare impacts of two feasible, similar-sized approaches for reducing choice. One reduces the maximum number of firm offerings regionally; the other removes plans providing donut hole coverage – consumers’ most valued dimension. We find welfare losses are far smaller when coupled with elimination of a dimension of differentiation, as in the latter approach. We illustrate our findings’ relevance under current health care reforms, and consider the merits of instead imposing ex ante competition for entry.
Keywords: Medicare Part D, regulation, number of plans, product differentiation, discrete choice
JEL Classification: H42, H51, I11, I18, L13, L51, L88
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Marc Rysman and Daniel A. Ackerberg
-
By Daniel A. Ackerberg and Marc Rysman
-
On the Empirical Content of Quantal Response Equilibrium
By Philip A. Haile, Ali Hortacsu, ...
-
Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program
By Jason Abaluck and Jonathan Gruber
-
The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
By Claudio Lucarelli, Jeffrey Prince, ...
-
Reciprocal Dumping With Product Differentiation
By Mattias Ganslandt and Richard Friberg
-
Will Competitive Bidding Decrease Medicare Expenditures?
By Kerry Anne Mcgeary and Brett Katzman