Refining the Analysis of Medicare Plan Choices and Utilization: A Disaggregated Approach

Abstract

At age 65, most Americans choose between government-run Traditional Medicare (TM) or privately managed Medicare Advantage (MA). While research often compares these two plans broadly, such comparisons oversimplify critical differences. Within TM and MA, subplans subsidized by Medicaid or supplemented with additional coverage add complexity. Using Medicare Current Beneficiary Survey (MCBS) data, we dissect TM and MA into subgroups, analyzing prices, quality, and demand. Our findings reveal significant heterogeneity across subplans and biases in traditional TM vs. MA comparisons. Uniquely, we estimate substantial quality differences between subplans using a revealed preferences approach, offering insights beyond conventional survey methods.

Keywords: Medicare Plans, Medicare Pricing, Medicare Demand, Medicare Quality