Private Provision of Social Insurance: Drug-Specific Price Elasticities and Cost Sharing in Medicare Part D
American Economic Journal: Economic Policy
vol. 10,
no. 3, August 2018
(pp. 122-53)
Abstract
We explore how private drug plans set cost sharing in the context of Medicare Part D. While publicly provided drug coverage typically involves uniform cost sharing across drugs, we document substantial heterogeneity in the cost sharing for different drugs within privately provided plans. We also document that private plans systematically set higher consumer cost sharing for drugs or classes associated with more elastic demand; to do so, we estimate price elasticities of demand across more than 150 drugs and across more than 100 therapeutic classes. We conclude by discussing the various channels that likely affect private plans' cost-sharing decisions.Citation
Einav, Liran, Amy Finkelstein, and Maria Polyakova. 2018. "Private Provision of Social Insurance: Drug-Specific Price Elasticities and Cost Sharing in Medicare Part D." American Economic Journal: Economic Policy, 10 (3): 122-53. DOI: 10.1257/pol.20160355Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- H51 National Government Expenditures and Health
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L65 Chemicals; Rubber; Drugs; Biotechnology; Plastics
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