Identifying Winners and Losers Under Proposals to Simplify Drug Plan Choice in Medicate Part D (ASUF 30005874)

Project: Research project

Project Details


Identifying Winners and Losers Under Proposals to Simplify Drug Plan Choice in Medicate Part D (ASUF 30005874) Identifying Winners and Losers Under Proposals to Simplify Drug Plan Choice in Medicate Part D SUMMARY COVER SHEET 1. Title: Evaluating the Welfare Implications of Health Insurance Reform: Lessons from Medicare Part D. 2. Principal Investigator: Jonathan Ketcham, PhD, Associate Professor, Department of Marketing, Arizona State University. P.O. Box 874106, Tempe, AZ 85287-4106. CO-PI: Nicolai Kuminoff, PhD, Assistant Professor, Department of Economics, Arizona State University. P.O. Box 879801, Tempe, AZ 85287-9801. 3. Study Duration: January 1, 2014-December 31, 2014. 4. Anticipated Budget Request: $49,844. 5. Executive Summary: During the first five years of Medicare Part D the average beneficiary could have saved between $292 and $520 by purchasing the same drugs under a different prescription drug plan (PDP). What caused this persistent overspending? Are people too confused about how Part D works to choose their cost-minimizing plans? Or are they simply choosing to pay for higher quality plans that offer better customer service and risk protection? The answers to these questions are critical for assessing the cost and benefits of policy reforms that have been proposed to simplify the Part D program. Past proposals have included standardizing certain aspects of plans, limiting the number of insurers, and limiting the number of plans each insurer can offer. We propose to investigate the costs and benefits of the proposed reforms to Part D by developing a new analytical model of PDP choice that recognizes some peoples choices incorporate confusion while others are making careful, informed decisions. Our project has three specific objectives: (i) to develop an analytical model of how people choose PDPs; (ii) to validate the models ability to predict individuals PDP choices; and (iii) to determine various reforms implications for different demographic groups. We will accomplish these objectives by capitalizing on the research teams expertise in several domains, including modeling consumer choice, the design and regulation of Medicare Part D, and data development at the Centers for Medicare and Medicaid Services (CMS). We have already acquired the ideal data from CMStheir full random 20% sample of Medicare beneficiaries from 2006- 2010, including their drug purchases, health conditions, and PDP choices. We have also collaborated with CMS to identify a highly accurate cost calculator that predicts what each person would have spent under each available plan. Under this grant, we will merge the CMS data with the Medicare Current Beneficiary Survey that measures enrollees knowledge of how Part D works along with their wealth, education and other demographics important to understanding disparities and equity across socioeconomic status. It will be the first time the two data sets have been used together for academic research on these topics. Our analysis will provide a rich set of information about the costs and benefits of several proposed reforms to Part Dhow prevalent is confusion, who is confused, who would benefit and who would lose under such reforms, and by how much? Given the parallels between the Part D market and the health insurance exchanges developed under the Affordable Care Act, our research is also likely to offer insights about the design and potential reforms of those insurance markets as well.
Effective start/end date1/14/1412/31/14


  • National Institute for Health Care Management (NIHCM): $49,844.00


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