Assessing the Design of the Low-Income Subsidy Program in Medicare Part D
Details
The structure of the Medicare Part D prescription drug program generally encourages plan sponsors to submit low bids. However, rules in the program relating to low-income beneficiaries generate a different set of incentives for plans seeking to serve those beneficiaries. This report finds that over the first five years of the Part D program, two types of plans emerged -- those that catered primarily to beneficiaries receiving low-income subsidies (LIS plans) and those that catered primarily to standard beneficiaries (non-LIS plans). For each additional plan sponsor that entered the market, non-LIS basic plans reduced their bids by a statistically significant $0.40 to $0.70 (or .5%-.8%) per month of coverage, on average, while the bids of LIS plans did not repond in a statistically significant way. LIS plans were also more likely to increase their bids so that their premiums approached the maximum premium subsidy, called the low-income benchmark. Figures and tables. This is a print on demand report.
Assessing the Design of the Low-Income Subsidy Program in Medicare Part D James R. Baumgardner and Melinda J. Beeuwkes Buntin and Andrew Stocking and Anna Cook
Details
The structure of the Medicare Part D prescription drug program generally encourages plan sponsors to submit low bids. However, rules in the program relating to low-income beneficiaries generate a different set of incentives for plans seeking to serve those beneficiaries. This report finds that over the first five years of the Part D program, two types of plans emerged -- those that catered primarily to beneficiaries receiving low-income subsidies (LIS plans) and those that catered primarily to standard beneficiaries (non-LIS plans). For each additional plan sponsor that entered the market, non-LIS basic plans reduced their bids by a statistically significant $0.40 to $0.70 (or .5%-.8%) per month of coverage, on average, while the bids of LIS plans did not repond in a statistically significant way. LIS plans were also more likely to increase their bids so that their premiums approached the maximum premium subsidy, called the low-income benchmark. Figures and tables. This is a print on demand report.