Medicare Reform

An Economic and Behavioral Evaluation of Medicare Part D

This program project examines the economic underpinnings of Medicare Part D and its consequences.  Part D represents one of the most important reforms to the US Medicare system in its history, and a policy experiment with weighty consequences.  Researchers will study the economics of consumer choice, the economics of aging, insurance design, pharmaceutical innovation, and health policy from an array of perspectives: beneficiaries; insurers; drug manufacturers; policy; and elderly households.  In particular, researchers will examine the effects of the Part D coverage gap—known as the “doughnut hole”—on prescription medication adherence, how drug plan formulary and benefit design (FBD) affects competition and adverse selection, and the effects of Part D on the behavior of pharmaceutical firms (through investment in advertising and R&D).  This program project will provide an integrated economic evaluation of the welfare effects of Part D, and promote Medicare-related research of policy and scientific interest.

Principal Investigator: Dana Goldman

Co-Investigators: Geoffrey Joyce, Darius Lakdawalla, Neeraj Sood, Julie Zissimopoulos


The Science of Medicare Reform

The National Institutes of Health (NIH) awarded more than $5 million to Dr. Goldman to lead a multidisciplinary team spanning four research institutions—Stanford University, USC, RAND Corporation, and the University of California, Berkeley—to study specific applications of comparative effectiveness research (CER) to the Medicare program.  This study will examine consumer plan choice in the Medicare Part D marketplace; investigate how formulary and benefit design affects competition, utilization, health and spending; and apply comparative effectiveness analysis to identify clinical areas for potential savings.  Researchers will also examine the long-term spending and enrollment effects of changes to the Medicare program as a result of the Affordable Care Act (ACA). Study findings with respect to policies such as a means-tested Part A premium, increasing the eligibility age, and vouchers have revealed a 5 to 22 percent spending reduction between the years 2012 to 2036, suggesting that considering such policies may be necessary for long-run cost containment.

Principal Investigators: Dana Goldman, Christine Eibner, Jay Bhattacharya

Co-Investigators: Darius Lakdawalla, Geoffrey Joyce, Jeffrey Sullivan, David Lowsky, Peter Huckfeldt, Daniella Perlroth