Insurers' Negotiating Leverage and the External Effects of Medicare Part D

No 16251, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Public financing of private health insurance may generate external effects beyond the subsidized population, by influencing the size and bargaining power of health insurers. We test for this external effect in the context of Medicare Part D. We analyze how Part D-related insurer size increases impacted retail drug prices negotiated by insurers for their non-Part D commercial market. On average, Part D lowered retail prices for commercial insureds by 5.8% to 8.5%. The cost-savings to the commercial market amount to $3bn per year, which approximates the total annual savings experienced by Part D beneficiaries who previously lacked drug coverage.

JEL-codes: H57 I11 I18 L11 L51 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-hea and nep-ias
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Citations: View citations in EconPapers (11)

Published as “Insurers' Negotiating Leverage and the External Effect of Medicare Part D”, Review of Economics and Statistics (w/ Darius Lakdawalla) May 2015, Vol. 97, No. 2, Pages 314-331

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Related works:
Journal Article: Insurers’ Negotiating Leverage and the External Effects of Medicare Part D (2015)
Working Paper: Insurers’ Negotiating Leverage and the External Effects of Medicare Part D (2011)
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