How Are Part D Plans Different? Evidence from Randomly Assigned Enrollees
How Are Part D Plans Different? Evidence from Randomly Assigned Enrollees
Monday, June 11, 2018: 5:50 PM
Azalea - Garden Level (Emory Conference Center Hotel)
Discussant: Adam Sacarny
While substantial focus has been paid to the financial characteristics of prescription drug plans, far less attention has been given to the impact of non-financial features, including formulary composition, utilization restrictions, and pharmacy network composition. This is an important gap in the literature, given the substantial non-financial differences that exist across drug plans, and given broader questions that these non-financial characteristics could tie into.
To examine the impact of non-financial features independently from financial characteristics of drug plans, we study how drug and non-drug spending and utilization differs across low-income exemption beneficiaries randomly auto-assigned to different Medicare Part D plans. These beneficiaries are not subject to cost sharing, eliminating the possibility that differences across Part D plans are driven by differences in deductibles, copayments, and other financial incentives. We also leverage a new data source indicating which low-income beneficiaries failed to actively choose a Part D plan and were randomly auto-assigned to a plan, allowing us to focus on this population and eliminating the possibility that differences across Part D plans are driven by endogenous sorting of beneficiaries to plans.
We show that Part D plan assignment has important effects on drug spending and utilization, with formularies influencing the drugs beneficiaries take. Perhaps more importantly, we also show that formularies affect non-drug spending, providing new evidence for complementarities between these two types of healthcare utilization. Finally, we study the effects of Part D plan assignment on mortality and other outcomes and relate cross-plan differences in those outcomes to cross-plan differences in drug and non-drug utilization.
In addition to its immediate implications, this study could be of broader academic and policy interest, by providing insights on important issues such as drug-driven medical offsets, behavioral determinants of plan choice, medication adherence, opioid use, and drug substitutability.
To examine the impact of non-financial features independently from financial characteristics of drug plans, we study how drug and non-drug spending and utilization differs across low-income exemption beneficiaries randomly auto-assigned to different Medicare Part D plans. These beneficiaries are not subject to cost sharing, eliminating the possibility that differences across Part D plans are driven by differences in deductibles, copayments, and other financial incentives. We also leverage a new data source indicating which low-income beneficiaries failed to actively choose a Part D plan and were randomly auto-assigned to a plan, allowing us to focus on this population and eliminating the possibility that differences across Part D plans are driven by endogenous sorting of beneficiaries to plans.
We show that Part D plan assignment has important effects on drug spending and utilization, with formularies influencing the drugs beneficiaries take. Perhaps more importantly, we also show that formularies affect non-drug spending, providing new evidence for complementarities between these two types of healthcare utilization. Finally, we study the effects of Part D plan assignment on mortality and other outcomes and relate cross-plan differences in those outcomes to cross-plan differences in drug and non-drug utilization.
In addition to its immediate implications, this study could be of broader academic and policy interest, by providing insights on important issues such as drug-driven medical offsets, behavioral determinants of plan choice, medication adherence, opioid use, and drug substitutability.