Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104361
Authors: 
Kesternich, Iris
Heiss, Florian
McFadden, Daniel
Winter, Joachim
Year of Publication: 
2012
Series/Report no.: 
Munich Discussion Paper 2012-25
Abstract: 
In recent years, consumer choice has become an important element of public policy. One reason is that consumers differ in their tastes and needs, which they can express most easily through their own choices. Elements that strengthen consumer choice feature prominently in the design of public insurance markets, for instance in the United States in the recent introduction of prescription drug coverage for older individuals via Medicare Part D. For policy makers who design such a market, an important practical question in the design phase of such a new program is how to deduce enrollment and plan selection preferences prior to its introduction. In this paper, we investigate whether hypothetical choice experiments can serve as a tool in this process. We combine data from hypothetical and real plan choices, elicited around the time of the introduction of Medicare Part D. We first analyze how well the hypothetical choice data predict willingness to pay and market shares at the aggregate level. We then analyze predictions at the individual level, in particular how insurance demand varies with observable characteristics. We also explore whether the extent of adverse selection can be predicted using hypothetical choice data alone.
Subjects: 
Medicare
health insurance demand
hypothetical choice experiments
JEL: 
I11
C25
D12
H51
I18
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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