Salience, Myopia, and Complex Dynamic Incentives: Evidence from Medicare Part D

• 成果类型: Article
• 署名作者: Dalton, Christina M.; Gowrisankaran, Gautam; Town, Robert J.
• 署名单位: Wake Forest University; University of Arizona; Universite de Montreal; HEC Montreal; National Bureau of Economic Research; University of Texas System; University of Texas Austin
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdz023
• 发表日期: 2020
• 页码: 822-869
• 关键词: prescription drug-use; of-pocket costs; demand; CHOICE; IMPACT; MODEL; selection; sales

摘要

The standard Medicare Part D drug insurance contract is non-linear-with reduced subsidies in a coverage gap-resulting in a dynamic purchase problem. We consider enrolees who arrived near the gap early in the year and show that they should expect to enter the gap with high probability, implying that, under a benchmark model with neoclassical preferences, the gap should impact them very little. We find that these enrolees have flat spending in a period before the doughnut hole and a large spending drop in the gap, providing evidence against the benchmark model. We structurally estimate behavioural dynamic drug purchase models and find that a price salience model where enrolees do not incorporate future prices into their decision-making at all fits the data best. For a nationally representative sample, full price salience would decrease enrolee spending by 31%. Entirely eliminating the gap would increase insurer spending 27%, compared to 7% for generic-drug-only gap coverage.