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

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.