Department of Economics
University of Delaware
Working Paper #2008-05
Income-related Patient Cost-sharing: Simulation for Prescription Drugs under Medicare
Kenneth A. Lewis and Laurence S. SeidmanABSTRACT
This paper studies an application of income-related patient cost-sharing. Using data from the Medicare Current Beneficiary Survey, we find that varying patient cost-sharing rates with patient income in the Medicare prescription drug program can reduce the severity of two problems: high percent-of-income burdens, and unequal medication due to income. We estimate behavioral responses in the Medicare population and incorporate the estimates into a micro-simulation model which uses data that are representative of the actual Medicare population. We find that introducing income-related patient cost-sharing into a Medicare drug program can dramatically reduce the severity of the two problems.
JEL Code: I18
Key Words: Patient Cost-Sharing, Medicare