What Drove First Year Premiums in Stand-Alone Medicare Drug Plans?

Medicare's Part D offers heavily subsidized new drug coverage to 22.5 million seniors to date, of whom 16.5 million are in stand-alone drug plans (Department of Health and Human Services, 2006). The government delegated the delivery of the benefit to private insurance companies arguing that market incentives would lead them to provide coverage at the lowest price possible. The massive entry of plans and the large variety of actuarial designs and formularies offered make it complicated to assess how insurers set premiums during this first year of the program. This paper presents the first econometric evidence on whether premiums in the stand-alone drug plan markets are driven by the relevant factors predicted by insurance theory. Using data gathered from the Centers for Medicare and Medicaid Services, we measure a plan's generosity as the simulated out of pocket payments for different sets of drugs. We also identify the listed full drug prices by each insurer and merge these with other plan and geographical characteristics to test predictions about how insurers set premiums. We find evidence that a) the number of insurers in a market is big enough such that it does not appear to influence premiums, b) the full drug prices listed appear to be reflected to some degree in the premiums charged c) plan characteristics such as the provision of extra coverage are reflected in higher premiums, but overall there is a weak relationship between premiums and simulated out of pocket payments for different sets of drugs d) the institutional setting and regional market characteristics affect the firms' bidding behavior and their resulting premiums. Insurers appear to have responded strongly to program incentives such as the automatic enrollment of dual Medicaid-Medicare beneficiaries into low cost plans. As data for 2007 are made available, it will be important to see if plans follow similar pricing strategies in subsequent years of this program.

An Analysis of the Medicare Prescription Drug Benefit

Medicare has recently experienced the largest expansion of benefits since its in- ception: the inclusion of prescription drug coverage under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The policy debate has mainly focused on estimating the cost of implementing the new benefit, with little attention to the quantification of its impact on beneficiaries’ life expectancy, health status, and health-related behaviors. The policy came into effect in January 2006; therefore, no post-policy data are available yet. This paper develops and estimates a dynamic model of the demand for supplemental health insurance and different types of medical care, and uses the model to forecast the effects of the new Medicare benefit in a way that ex- plicitly takes into account the policy’s unique actuarial design and the dynamic features it includes. The results show that the new policy increases expenditure on prescription drugs by 24%, and has a positive effect on health status and life expectancy. There is a corresponding increase in the utilization of inpatient and outpatient care, due to the extension of life for people in poor health. The cost of extending life by a year is estimated to be between $38,000 and$62,000. The take-up rate of the new benefit reaches 85% by the fifth year of implementation, and there is a sizable crowding-out effect of private plans offering supplemental prescription drug coverage. The dynamic model is also used to evaluate the impact of alternative designs for the prescription drug benefit

The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies

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.

The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies

Medicare’s prescription drug benefit (Part D) has been its largest expansion of benefits since 1965. Since the implementation of Part D, many regulatory proposals have been advanced in order to improve this government-created market. Among the most debated are proposals to limit the number of options, in response to concerns that there are “too many” plans. In this paper we study the welfare impact of two feasible approaches (of similar magnitude) toward limiting the number of Part D plans: reducing the maximum number of plans each firm can offer per region and removing plans that provide doughnut hole coverage. To this end, we propose and estimate a model of market equilibrium, which we later use to evaluate the impact of regulating down the number of Part D plans. Our counterfactuals provide an important assessment of the losses to consumers (and producers) resulting from government limitations on choice. These losses must be weighed against the widely discussed expected gains due to reduced search costs from limiting options. We find that the annual search costs should be at least two thirds of the average monthly premium in order to justify a regulation that allows only two plans per firm. However, this number would be substantially lower if the limitation in the number of plans is coupled with a decrease in product differentiation (e.g., by removing plans that cover the doughnut hole). For validation purposes, we also assess the impact of a recent major merger, and find that our model performs very well out of sample.Medicare Part D, regulation, number of plans, product differentiation, discrete choice

A Quality-Adjusted Price Index for Colorectal Cancer Drugs

The average price of treating a colorectal cancer patient with chemotherapy increased from about $100 in 1993 to$36,000 in 2005, due largely to the approval and widespread use of five new drugs between 1996 and 2004. We examine whether the substantial increase in spending has been worth it. Using discrete choice methods to estimate demand, we construct a price index for colorectal cancer drugs for each quarter between 1993 and 2005 that takes into consideration the quality (i.e., the efficacy and side effects in randomized clinical trials) of each drug on the market and the value that oncologists place on drug quality. A naive price index, which makes no adjustments for the changing attributes of drugs on the market, greatly overstates the true price increase. By contrast, a hedonic price index and two quality-adjusted price indices show that prices have actually remained fairly constant over this 13-year period, with slight increases or decreases depending on a model’s assumptions.

Bundling Among Rivals: A Case of Pharmaceutical Cocktails

We empirically analyze the welfare effects of cross-firm bundling in the pharmaceutical industry. Physicians often treat patients with "cocktail" regimens that combine two or more drugs. Firms cannot price discriminate because each drug is produced by a different firm and a physician creates the bundle in her office from the component drugs. We show that a less competitive equilibrium arises with cocktail products because firms can internalize partially the externality their pricing decisions impose on competitors. The incremental profits from creating a bundle are sometimes as large as the incremental profits from a merger of the same two firms.

Sloshing in a rotating liquid inside a closed sea cage for fish farming

Sloshing in a sea cage with a slowly rotating liquid is investigated. The cage is axisymmetric, and the liquid is subjected to a nearly uniform angular velocity about the vertical axis of the cage. Both experimental and theoretical investigations are presented. It is shown that rotation modifies the sloshing regimes of a non-rotating liquid by splitting the natural frequencies. Therefore, resonant sloshing regimes can be manipulated by varying the rotation rate of the liquid.acceptedVersio

Surgical site infection after caesarean section. Space for post-discharge surveillance improvements and reliable comparisons

Surgical site infections (SSI) after caesarean section (CS) represent a substantial health system concern. Surveying SSI has been associated with a reduction in SSI incidence. We report the findings of three (2008, 2011 and 2013) regional active SSI surveillances after CS in community hospital of the Latium region determining the incidence of SSI. Each CS was surveyed for SSI occurrence by trained staff up to 30 post-operative days, and association of SSI with relevant characteristics was assessed using binomial logistic regression. A total of 3,685 CS were included in the study. A complete 30 day post-operation follow-up was achieved in over 94% of procedures. Overall 145 SSI were observed (3.9% cumulative incidence) of which 131 (90.3%) were superficial and 14 (9.7%) complex (deep or organ/space) SSI; overall 129 SSI (of which 89.9% superficial) were diagnosed post-discharge. Only higher NNIS score was significantly associated with SSI occurrence in the regression analysis. Our work provides the first regional data on CS-associated SSI incidence, highlighting the need for a post-discharge surveillance which should assure 30 days post-operation to not miss data on complex SSI, as well as being less labour intensive

AGILE Observations of the LIGO-Virgo Gravitational-wave Events of the GWTC-1 Catalog

We present a comprehensive review of AGILE follow-up observations of the Gravitational Wave (GW) events and the unconfirmed marginal triggers reported in the first LIGO-Virgo (LV) Gravitational Wave Transient Catalog (GWTC-1). For seven GW events and 13 LV triggers, the associated 90% credible region was partially or fully accessible to the AGILE satellite at the T 0; for the remaining events, the localization region was not accessible to AGILE due to passages into the South Atlantic Anomaly, or complete Earth occultations (as in the case of GW170817). A systematic search for associated transients, performed on different timescales and on different time intervals about each event, led to the detection of no gamma-ray counterparts. We report AGILE MCAL upper limit fluences in the 400 keV-100 MeV energy range, evaluated in a time window of T 0 ± 50 s around each event, as well as AGILE GRID upper limit (UL) fluxes in the 30 MeV-50 GeV energy range, evaluated in a time frame of T 0 ± 950 s around each event. All ULs are estimated at different integration times and are evaluated within the portions of GW credible region accessible to AGILE at the different times under consideration. We also discuss the possibility of AGILE MCAL to trigger and detect a weak soft-spectrum burst such as GRB 170817A