Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program
- (pp. 1180-1210)
Abstract
We evaluate the choices of elders across their insurance options under the Medicare Part D Prescription Drug plan, using a unique dataset of prescription drug claims matched to information on the characteristics of choice sets. We document that elders place much more weight on plan premiums than on expected out-of-pocket costs; value plan financial characteristics beyond any impacts on their own financial expenses or risk; and place almost no value on variance- reducing aspects of plans. Partial equilibrium welfare analysis implies that welfare would have been 27 percent higher if patients had all chosen rationally. (JEL D12, I11, J14)Citation
Abaluck, Jason, and Jonathan Gruber. 2011. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program." American Economic Review, 101 (4): 1180-1210. DOI: 10.1257/aer.101.4.1180Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- I11 Analysis of Health Care Markets
- J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination