"Private provision of social insurance: drug-specific price elasticities and pricing in Medicare Part D"

Please note: All research in progress seminars are off-the-record. Any information about methodology and/or results is embargoed until publication.

Abstract:

Although optimal social insurance theory suggests that consumer cost-sharing should increase in a drug's elasticity of demand, publicly provided drug coverage typically involves uniform cost-sharing across drugs. Does the private market behave differently? We examine this question in the context of Medicare Part D. To do so, we first exploit the famous donut hole – at which insurance becomes discontinuously generous at the margin – together with detailed claim-level data for about 2 million beneficiaries to estimate price elasticities of demand for almost 200 different common drugs and 80 different common therapeutic classes. We document substantial heterogeneity in the price elasticity of demand across drugs and diseases, with an average elasticity estimate across drugs of -0.22 and a standard deviation of 0.5. Drawing on additional detail on the contract design of hundreds of Medicare Part D private plans, we document - in contrast to pricing in public prescription drug plans - substantial heterogeneity in the cost-sharing rate private plans charge for different drugs. We find that private plans vary cost-sharing in the direction of the social optimum: charging higher consumer coinsurance for drugs and classes with more elastic demand. Results from a highly stylized model are consistent with the empirical findings: profit maximizing private firms have incentives to vary cost-sharing across drugs in the socially efficient direction. Our findings suggest that benefit design may be more efficient in privately rather than publicly provided insurance.

Adam Tooze is the Kathryn and Shelby Cullom Davis Professor of History at Columbia University.

NOTE: Event registration is full. Some seats may be available in case of no shows; please arrive early.

For the first time since it started moving toward "ever closer union" more than a half-century ago, Europe finds itself closer to unraveling than to greater integration. The euro, conceived to cement unity and hitch Germany forever to its European partners, has sown disunity by placing economies and cultures as diverse as the Greek and the German within the same currency. Britain is to hold a referendum this year or next on leaving the European Union. Its outcome is uncertain. At Europe's eastern borders, President Putin is doing what he can to undermine the European idea and create havoc in the no-man's lands between the Union and Russia. Ukraine has paid a preposterous price in blood and treasure for seeking a trade accord with Brussels, a perceived offense to Moscow. Refugees from a war the West has fanned through indecision, and from other conflict zones, converge on the continent; Germany alone took in 1.1 million in 2015. Parisians die in a hale of bullets. Brussels shuts down. Everywhere, instability and anxiety favor nationalist movements.

The miracle of a Europe whole and free is increasingly taken for granted. As miracles go, it's just so 20th-century. America, to a significant degree, has disengaged -- Europe is an old story by now. Is the greatest peace-generating mechanism of recent decades on the verge of coming apart?

Roger Cohen has worked for The New York Times for 25 years as a foreign correspondent, foreign editor, and now columnist. Prior to that he worked for The Wall Street Journal and Reuters. He is the author of four books. The latest, a family memoir entitled The Girl from Human Street: Ghosts of Memory in a Jewish Family, was published to wide acclaim by Alfred A. Knopf in January, 2015. He has taught at Harvard and Princeton and his work has been recognized with several awards, including a Lifetime Achievement Award from Britain’s Next Century Foundation and a prize from the Overseas Press Club of New York. Raised in South Africa and England, a graduate of Balliol College, Oxford, he is a naturalized American.

This seminar is part of the Comparative Politics Workshop in the Department of Political Science and is co-sponsored by The Europe Center.

Abstract

Taiwan’s domestic politics, particularly presidential elections, has been the main driver of the island’s relations with China for two decades. The 2016 elections, in which the Democratic Progressive Party, led by Dr. Tsai Ing-wen, won both the presidency and majority control of the Legislative elections, promises to be no exception. Although PRC intentions under President Xi Jinping are far from certain, some change from the state of play under the current Ma Ying-jeou administration seems fairly certain, with implications for U.S. policy.

Bio

Richard Bush is a Senior Fellow at the Brookings Institution and Director of its Center for Northeast Asian Policy Studies, and the Chen-Fu and Cecilia Yen Koo Chair in Taiwan Studies. He came to Brookings in July 2002 after nineteen years working in the US government, including five years as the Chairman and Managing Director of the American Institute in Taiwan. He is the author of a number of articles on U.S. relations with China and Taiwan, and of At Cross Purposes, a book of essays on the history of America’s relations with Taiwan, published in March 2004 by M. E. Sharpe. In the spring of 2005, Brookings published his study on cross-Strait relations, entitled Untying the Knot: Making Peace in the Taiwan Strait. In 2013, Brookings published his Uncharted Strait: The Future of China-Taiwan Relations.

This talk is co-sponsored by the Taiwan Democracy Project in the Center on Democracy, Development, and the Rule of Law and the U.S.-Asia Security Initiative in the Walter H. Shorenstein Asia-Pacific Research Center.

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*Registration is now closed. For more information, please contact Kharis Templeman at kharis@stanford.edu.*

On January 16, 2016, Taiwanese went to the polls to elect a new president and legislature. The results were historic: Tsai Ing-wen of the opposition Democratic Progressive Party (DPP) won a landslide victory over two opponents, and the DPP won a comfortable majority in the legislature, giving the party full control over the central government for the first time. In contrast, the ruling Chinese Nationalist Party, or Kuomintang (KMT), suffered its worst defeat in the presidential election since 2000, and its worst-ever defeat in the legislative elections, and it faces a long, difficult road to political recovery. This election was also notable for the entry into electoral politics of some of the leaders of the so-called "Sunflower Movement": the upstart New Power Party won five seats, becoming the third-largest party in the legislature.

This seminar will feature remarks by Larry Diamond, senior fellow at the Freeman Spogli Institute for International Affairs, and Kharis Templeman, the program manager of the Taiwan Democracy Project in the Center on Democracy, Development, and the Rule of Law. Dr. Diamond and Dr. Templeman will offer their thoughts about who won, why, what it means for Taiwan's democratic development, what to expect from the new government, and how it will affect relations between Taiwan, the United States, and the People's Republic of China.

This event is free and open to the public, and lunch will be served.

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Video from this event can be found here.