TY  - JOUR
AU  - Lucarelli,Claudio
AU  - Prince,Jeffrey
AU  - Simon,Kosali
TI  - The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14296
PY  - 2008
Y2  - September 2008
UR  - http://www.nber.org/papers/w14296
L1  - http://www.nber.org/papers/w14296.pdf
N1  - Author contact info:
Claudio Lucarelli
Assistant Professor
Department of Policy Analysis
and Management
Cornell University
MVR Hall
Ithaca, NY 14853-4401
E-Mail: cl443@cornell.edu

Jeffrey Prince
Associate Professor
Department of Business Economics and Public Policy
Kelley School of Business
Indiana University
1309 E. Tenth St.
Bloomington, IN 47405
E-Mail: jeffprin@indiana.edu

Kosali I. Simon
School of Public and Environmental Affairs
Indiana University
Rm 359
1315 East Tenth Street
Bloomington, IN 47405-1701
Tel: (812) 856-3850
E-Mail: simonkos@indiana.edu
AB  - Motivated by widely publicized concerns that there are “too many” plans, we structurally estimate (and validate) an equilibrium model of the Medicare Part D market to study the welfare impacts of two feasible, similar-sized approaches for reducing choice. One reduces the maximum number of firm offerings regionally; the other removes plans providing donut hole coverage – consumers’ most valued dimension. We find welfare losses are far smaller when coupled with elimination of a dimension of differentiation, as in the latter approach. We illustrate our findings’ relevance under current health care reforms, and consider the merits of instead imposing ex ante competition for entry.
ER  -