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- W2799999401 abstract "Insurance benefit design has important implications for consumer welfare. In this article, we model insurer behaviour in the Medicare prescription drug coverage market and show that strategic private insurer incentives impose a fiscal externality on the traditional Medicare program. We document that plans covering medical expenses have more generous drug coverage than plans that are only responsible for prescription drug spending, which translates into higher drug utilization by enrolees. The effect is driven by drugs that reduce medical expenditure and treat chronic conditions. Our equilibrium model of benefit design endogenizes plan characteristics and accounts for asymmetric information; the model estimates confirm that differential incentives to internalize medical care offsets can explain disparities across plans. Counterfactuals show that strategic insurer incentives are as important as asymmetric information in determining benefit design." @default.
- W2799999401 created "2018-05-17" @default.
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- W2799999401 date "2015-12-01" @default.
- W2799999401 modified "2023-09-25" @default.
- W2799999401 title "Externalities and Benefit Design in Health Insurance" @default.
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- W2799999401 doi "https://doi.org/10.3386/w21783" @default.
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