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Related Experiment Videos

Payment policy and competition in the Medicare+Choice program.

Steven D Pizer1, Austin B Frakt

  • 1Boston University, Department of Veterans Affairs, Abt Associates Inc., USA. pizer@bu.edu

Health Care Financing Review
|January 28, 2003
PubMed
Summary

Medicare+Choice plans increased costs and cut benefits, but competition, not just payment rates, influenced these decisions. This suggests Medicare can enhance benefits without raising spending or costs for beneficiaries.

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Area of Science:

  • Health economics
  • Public policy
  • Healthcare management

Background:

  • Medicare+Choice (M+C) plans significantly increased premiums and reduced benefits recently.
  • Inadequate payment rates were cited as the primary reason for these changes.

Purpose of the Study:

  • To investigate the factors influencing Medicare+Choice plan premium and benefit decisions.
  • To differentiate the impact of payment rates versus interplan competition on plan offerings.

Main Methods:

  • Utilized a natural experiment to analyze plan premium and benefit adjustments.
  • Separated the effects of Medicare payment rates, competition intensity, and underlying coverage costs.

Main Results:

  • Found that interplan competition significantly impacts premium and benefit decisions, comparable to payment rates.

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  • Demonstrated that competition is a crucial factor in plan behavior.

    • Conclusions:

    • Medicare+Choice plan decisions are influenced by both payment rates and market competition.
    • The Medicare Program can potentially improve beneficiary benefits without increasing overall spending or costs.