Medicare Reform: Estimation of the Impacts of Premium Support Systems

40 Pages Posted: 15 Sep 2016  

Awi Federgruen

Columbia Business School - Decision Risk and Operations

Lijian Lu

Columbia University - Columbia Business School

Date Written: September 13, 2016

Abstract

Medicare reform plans advocate reducing the capitation levels or determining these endogenously as a function of the premium bids, for example, the lowest, the second-lowest or a weighted average of the bids. Based on a price competition model tailored toward this market, and actual 2010 county-by county data, we estimate the impact such reforms would have on the plans’s market shares, equilibrium premia, the government’s and the beneficiaries’ costs. We employ two methodologies to derive the model parameters. The predicted impacts are remarkably consistent and reveal, for example, that government costs could be reduced by 16.5%-21%.

Keywords: Medicare Reform, Medicare Advantage Program, Medicare Subsidy Program, Competition, Estimation

Suggested Citation

Federgruen, Awi and Lu, Lijian, Medicare Reform: Estimation of the Impacts of Premium Support Systems (September 13, 2016). Columbia Business School Research Paper No. 16-68. Available at SSRN: https://ssrn.com/abstract=2839093

Awi Federgruen

Columbia Business School - Decision Risk and Operations ( email )

New York, NY
United States

Lijian Lu (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Paper statistics

Downloads
35
Abstract Views
143