The value of coverage in the medicare advantage insurance market

Dunn, Abe

doi:10.1016/j.jhealeco.2010.08.005

Cited by 17 publications

(10 citation statements)

References 34 publications

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“…While others have relied on these OOPC estimates (Dunn, 2010; McWilliams et al, 2011), they imperfectly capture MA benefit generosity. They are estimated using a relatively small sample of TM beneficiaries who appear in the MCBS, and do not capture the risk distribution realized by each plan.…”

Section: Methodsmentioning

confidence: 99%

Dominated choices and Medicare Advantage enrollment

Afendulis

Sinaiko

Frank

2015

Journal of Economic Behavior & Organization

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Research in behavioral economics suggests that certain circumstances, such as large numbers of complex options or revisiting prior choices, can lead to decision errors. This paper explores the enrollment decisions of Medicare beneficiaries in the Medicare Advantage (MA) program. During the time period we study (2007–2010), private fee-for-service (PFFS) plans offered enhanced benefits beyond those of traditional Medicare (TM) without any restrictions on physician networks, making TM a dominated choice relative to PFFS. Yet more than three quarters of Medicare beneficiaries remained in TM during our study period. We analyze the role of status quo bias in explaining this pattern of enrollment. Our results suggest that status quo bias plays an important role; the rate of MA enrollment was significantly higher among new Medicare beneficiaries than among incumbents. These results illustrate the importance of the choice environment that is in place when enrollees first enter the Medicare program.

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Section: Methodsmentioning

confidence: 99%

Dominated choices and Medicare Advantage enrollment

Afendulis

Sinaiko

Frank

2015

Journal of Economic Behavior & Organization

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“…Additionally, since the sample of MCBS respondents used to compute the OOPC estimates changes from year to year, the change in the sample introduces additional noise when comparing changes in the OOPC over time. However, they are the best available measures of plan benefit generosity, and other papers in the literature have relied on the OOPC as a summary measure of benefit generosity(McWilliams et al., 2011;Dunn, 2010). Unfortunately, the OOPC data is not available for 2006 so we are limited to estimating models of benefit generosity on the 2008-2009 sample.…”

mentioning

confidence: 99%

Premium Transparency in the Medicare Advantage Market: Implications for Premiums, Benefits, and Efficiency

Stockley¹,

McGuire²,

Afendulis³

et al. 2014

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In the Medicare Advantage (MA) market, private health insurers compete to offer plans with the most attractive premium and benefit package. Medicare provides a subsidy, based on a "benchmark payment rate", for each Medicare beneficiary a plan enrolls. We investigate how this subsidy, the primary policy lever in the market, affects the equilibrium premiums and benefits of MA plans. We exploit variation in benchmark payment rates within plans over time, coming from rebasing years where benchmark changes differed across areas in ways that were plausibly exogenous, to determine empirically how plan premiums and benefit generosity respond to changes in benchmarks. We find that premiums do not respond to changes in the benchmark payment rate on average but that insurers do pass through a portion of the benchmark increase by increasing plan benefit generosity.We argue that the way premium information is communicated to consumers influences the way in which plans pass through subsidy dollars and can account for the empirical results. More specifically, institutional features make it difficult for consumers to observe a large component of the plan premium, leading to a lack of demand response to premium reductions below the premium charged by traditional Medicare (the fee-for-service Part B premium). When demand does not respond to lower premiums, plans have an incentive to pass-through cost subsidies to consumers via more generous benefits that consumers may not value at cost, creating an inefficiently high level of benefit generosity. Our results provide evidence that a lack of premium transparency in the MA market may distort the combination of premium levels and benefit generosity offered in equilibrium, resulting in some degree of inefficiently high benefits. We conclude by discussing changes to the choice environment that would increase premium transparency and potentially soften the premium rigidities we find.

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“…We analyze each beneficiary's claims from the prior calendar year to code these variables. Fourth, we employ several publicly available data files from CMS: county-year data on MA plan offerings (Centers for Medicare & Medicare Services, 2007-2010a, county-year MA benchmark payment rates (Centers for Medicare & Medicare Services, 2007-2010d, county-year average TM spending and risk score data (Centers for Medicare & Medicare Services, 2007b, 2008-2010, county-year average MA capitation payment and risk score data (Centers for Medicare & Medicare Services, 2007-2010c, and plan-county-year Medicare Advantage enrollment counts (Centers for Medicare & Medicare Services, 2007-2010b.…”

Section: Datamentioning

confidence: 99%

Dominated Choices and Medicare Advantage Enrollment

Afendulis

Sinaiko

Frank

2014

View full text Add to dashboard Cite

Research in behavioral economics suggests that certain circumstances, such as large numbers of complex options or revisiting prior choices, can lead to decision errors. This paper explores the enrollment decisions of Medicare beneficiaries in the Medicare Advantage (MA) program. During the time period we study (2007)(2008)(2009)(2010), private fee-for-service (PFFS) plans offered enhanced benefits beyond those of traditional Medicare (TM) without any restrictions on physician networks, making TM a dominated choice relative to PFFS. Yet more than three quarters of Medicare beneficiaries remained in TM during our study period. We analyze the role of status quo bias in explaining this pattern of enrollment. Our results suggest that status quo bias plays an important role; the rate of MA enrollment was significantly higher among new Medicare beneficiaries than among incumbents. These results illustrate the importance of the choice environment that is in place when enrollees first enter the Medicare program.

show abstract

The value of coverage in the medicare advantage insurance market

Cited by 17 publications

References 34 publications

Dominated choices and Medicare Advantage enrollment

Dominated choices and Medicare Advantage enrollment

Premium Transparency in the Medicare Advantage Market: Implications for Premiums, Benefits, and Efficiency

Dominated Choices and Medicare Advantage Enrollment

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