Strategic Formulary Design in Medicare Part D Plans

The design of Medicare Part D causes most beneficiaries to receive fragmented health insurance, with drug and medical coverage separated. Fragmentation is potentially inefficient since separate insurers optimize over only one component of healthcare spending, despite complementarities and substitutabilities between healthcare types. Fragmentation of only some plans can also lead to market distortions due to differential adverse selection, as integrated plans may use drug formularies to induce enrollment by patients that are profitable in the medical insurance market. We study the design of insurance plans in Medicare Part D, and find that formularies reflects these two differences in incentives.


Publication Date:
Aug 01 2018
Date Submitted:
Jun 28 2019
Pagination:
154-92
Citation:
American Economic Journal: Economic Policy
10
3
External Resources:




 Record created 2019-06-28, last modified 2019-08-05


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