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Insurers' negotiating leverage and the external effects of Medicare Part D

Author: Darius Lakdawalla; Wesley Yin; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2010.
Series: Working paper series (National Bureau of Economic Research), no. 16251.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
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  Read more...
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Additional Physical Format: Print version:
Lakdawalla, Darius.
Insurers' negotiating leverage and the external effects of Medicare Part D.
Cambridge, Mass. : National Bureau of Economic Research, ©2010
(DLC) 2010656204
Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Darius Lakdawalla; Wesley Yin; National Bureau of Economic Research.
OCLC Number: 654092844
Description: 1 online resource (34, [9] pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 16251.
Responsibility: Darius N. Lakdawalla, Wesley Yin.

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.

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