Private Provision of Social Insurance: The Case of Private Plans in Medicare
In this session we explore the role of private plans in the Medicare program. The three papers span all private parts of Medicare. The first paper considers the case of Medicare Advantage. The paper investigates whether MA plans that also offer prescription drug coverage set more efficient cost-sharing for prescription drugs, internalizing the externalities between prescription drugs and medical care. The second paper explores the efficiency role of Medigap, which is the supplementary private insurance that tops off Medicare. The authors estimate the degree of externality that Medigap imposes on the public insurance, and how this externality may differ across the inpatient and outpatient services. The last paper investigates, in the context of Medicare Part D, whether private plans are more efficient at the provision of a insurance than the public alternative. Specifically, the paper investigates whether private prescription drug plans set cost-sharing that is closer to the social optimum as compared to the typical cost-sharing schemes in public programs.