Demand for a Medicare prescription drug benefit: exploring consumer preferences under a managed competition framework.
Several proposals for adding a prescription drug benefit to the Medicare program rely on consumer choice and market forces to promote efficiency. However, little information exists regarding: 1) the extent of price sensitivity for such plans among Medicare beneficiaries, or 2) the extent to which drug-only insurance plans using various cost-control mechanisms might experience adverse selection. Using data from a survey of elderly Wisconsin residents regarding their likely choices from a menu of hypothetical drug plans, we show that respondents are likely to be price sensitive with respect to both premiums and out-of-pocket costs but that selection problems may arise in these markets. Outside intervention may be necessary to ensure the feasibility of a market-based approach to a Medicare drug benefit.
D000368:Aged; D000369:Aged, 80 and over; D001294:Attitude to Health; D002755:Choice Behavior; D002908:Chronic Disease; D003258:Consumer Behavior / Q000191:economics*; D003430:Cross-Sectional Studies; D005260:Female; D006301:Health Services Needs and Demand; D006302:Health Services Research; D006304:Health Status; D006801:Humans; D015273:Insurance Selection Bias; D007356:Insurance, Pharmaceutical Services / Q000145:classification* / Q000191:economics / Q000706:statistics & numerical data; D016015:Logistic Models; D008297:Male; D018854:Managed Competition / Q000191:economics / Q000458:organization & administration*; D006278:Medicare / Q000458:organization & administration*; D018803:Models, Economic; D012959:Socioeconomic Factors; D014481:United States; D014922:Wisconsin