Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program
Author(s)
Abaluck, Jason Todd; Gruber, Jonathan
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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)
Date issued
2011-06Department
Massachusetts Institute of Technology. Department of EconomicsJournal
American Economic Review
Publisher
American Economic Association
Citation
Abaluck, Jason, and Jonathan Gruber. “Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program.” American Economic Review 101.4 (2011): 1180–1210. © 2011 AEA
Version: Final published version
ISSN
0002-8282
1944-7981