Abstract
We investigated whether constraints on premium rebates by health plans in the Medicare+Choice program result in inefficient benefits. Since relationships between revenue and benefits could be confounded by unobserved variation in the cost of coverage, we took advantage of natural experiment that occurred following passage of the Benefits Improvement and Protection Act of 2000. Our findings indicate that benefits in zero premium plans were more sensitive to changes in payment rates than were benefits in plans that charged nonzero premiums. These results strongly suggest that current Medicare policy induces plans to offer benefits that are not valued by enrollees at or above their cost.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 79-93 |
| Number of pages | 15 |
| Journal | International journal of health care finance and economics |
| Volume | 3 |
| Issue number | 2 |
| DOIs | |
| State | Published - Jun 2003 |
Bibliographical note
Funding Information:This work was supported by the Centers for Medicare and Medicaid Services, contract No. HCFA-500-92-0014, and by a small grant from Abt Associates. The authors wish to thank Ronald Deacon of CMS for his consistent support for this project. We also wish to thank Robert Coulam, Bryan Dowd, Alan White, Teresa Doksum, and seminar participants at the Academy for Health Services Research and Health Policy and the Centers for Medicare and Medicaid Services for their helpful comments. Louise Hadden and Carolyn Robinson contributed expert programming. All remaining errors are our own.