Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D
The efficiency of publicly subsidized, privately provisioned social insurance programs depends on the interaction between strategic insurers and the subsidy mechanism. We study this interaction in the context of Medicare’s prescription drug coverage program. We find that the observed mechanism is su...
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Veröffentlicht in: | The Journal of political economy 2020-05, Vol.128 (5), p.1712-1752 |
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creator | Decarolis, Francesco Polyakova, Maria Ryan, Stephen P. |
description | The efficiency of publicly subsidized, privately provisioned social insurance programs depends on the interaction between strategic insurers and the subsidy mechanism. We study this interaction in the context of Medicare’s prescription drug coverage program. We find that the observed mechanism is successful in keeping “raise-the-subsidy” incentives relatively low, acts much like a flat voucher, and obtains a level of welfare close to that for the optimal voucher. Across a range of counterfactuals, we find that more efficient subsidy mechanisms share three features: they retain the marginal elasticity of demand, limit the exercise of market power, and preserve the link between prices and marginal costs. |
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Across a range of counterfactuals, we find that more efficient subsidy mechanisms share three features: they retain the marginal elasticity of demand, limit the exercise of market power, and preserve the link between prices and marginal costs.</description><subject>Economic theory</subject><subject>Elasticity of demand</subject><subject>Incentives</subject><subject>Marginal costs</subject><subject>Medicare</subject><subject>Political economy</subject><subject>Prescription drugs</subject><subject>Prices</subject><subject>Social security</subject><subject>Subsidies</subject><subject>Welfare</subject><issn>0022-3808</issn><issn>1537-534X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2020</creationdate><recordtype>article</recordtype><recordid>eNpdkd1qGzEQhUVJaZy0fYQiSAm52XQkrXblXhRCfpqAQwNuoXdCq511FNaSK-0a_PZRsJO2mRsN0sfRmTmEfGRwykBVX2qQUsIbMmFS1IUU5e89MgHgvBAK1D45SOkBcjEQ78i-4KVgopITMp-PTXLthl5gcgtPnad30a3NgP0md2HtWmzpPFhnenrj0xiNt_iVzjCl4BPtYljSW2ydNRHpnYkDvXhP3namT_hhdx6SX1eXP8-vi9mP7zfnZ7PClkoNheJTVBahNUrwpq6mrGUAoqmkKpFZ4B0KxZntLMOqm9Zt07A6X6uGCWiUEYfk21Z3NTZLbC36IZper6JbmrjRwTj9_4t393oR1rrmefYKssDJTiCGPyOmQS9dstj3xmMYk-YlSAFSKZnRo1foQxijz-M9UUyWFRPTTB1vKRtDShG7FzMM9FNOeptTBj_9a_0Few4mA5-3wGjv824XYRXzxv9-utN5BFI1mNI</recordid><startdate>20200501</startdate><enddate>20200501</enddate><creator>Decarolis, Francesco</creator><creator>Polyakova, Maria</creator><creator>Ryan, Stephen P.</creator><general>The University of Chicago Press</general><general>University of Chicago, acting through its Press</general><scope>NPM</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope><scope>7X8</scope><scope>5PM</scope></search><sort><creationdate>20200501</creationdate><title>Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D</title><author>Decarolis, Francesco ; Polyakova, Maria ; Ryan, Stephen P.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c488t-829e8ce0da832b7691d1003b6584e1c02fe3821cfc1e6f97dbb17c028b130b8a3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2020</creationdate><topic>Economic theory</topic><topic>Elasticity of demand</topic><topic>Incentives</topic><topic>Marginal costs</topic><topic>Medicare</topic><topic>Political economy</topic><topic>Prescription drugs</topic><topic>Prices</topic><topic>Social security</topic><topic>Subsidies</topic><topic>Welfare</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Decarolis, Francesco</creatorcontrib><creatorcontrib>Polyakova, Maria</creatorcontrib><creatorcontrib>Ryan, Stephen P.</creatorcontrib><collection>PubMed</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><collection>MEDLINE - Academic</collection><collection>PubMed Central (Full Participant titles)</collection><jtitle>The Journal of political economy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Decarolis, Francesco</au><au>Polyakova, Maria</au><au>Ryan, Stephen P.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D</atitle><jtitle>The Journal of political economy</jtitle><addtitle>J Polit Econ</addtitle><date>2020-05-01</date><risdate>2020</risdate><volume>128</volume><issue>5</issue><spage>1712</spage><epage>1752</epage><pages>1712-1752</pages><issn>0022-3808</issn><eissn>1537-534X</eissn><abstract>The efficiency of publicly subsidized, privately provisioned social insurance programs depends on the interaction between strategic insurers and the subsidy mechanism. 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subjects | Economic theory Elasticity of demand Incentives Marginal costs Medicare Political economy Prescription drugs Prices Social security Subsidies Welfare |
title | Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D |
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