NBER Working Papers by Jonathan D. Ketcham

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Working Papers

July 2015Which Models Can We Trust to Evaluate Consumer Decision Making? Comment on “Choice Inconsistencies among the Elderly”
with Nicolai V. Kuminoff, Christopher A. Powers: w21387
Neoclassical and psychological models of consumer behavior often make divergent predictions for the welfare effects of paternalistic policies, leaving wide scope for researchers’ choice of a model to influence their policy conclusions. We develop a framework to reduce this model uncertainty and apply it to administrative data on consumer decision making in Medicare Part D. Consumers’ choices for prescription drug insurance plans can be explained by Abaluck and Gruber’s (AER 2011) model of utility maximization with psychological biases or by a neoclassical version of their model that precludes such biases. We evaluate these competing hypotheses using nonparametric tests of utility maximization and a trio of model validation tests. We find that 79% of enrollment decisions in Medicare Part D ...
September 2008Medicare Part D's Effects on Elderly Drug Costs and Utilization
with Kosali Simon: w14326
We analyze Medicare Part D's net effect on elderly out-of-pocket (OOP) costs and use of prescription drugs using a dataset containing 1.4 billion prescription records from Wolters Kluwer Health (WKH). These data span the period December 2004-December 2007 and include pharmacy customers whose age as of 2007 is greater than 57 years. The outcomes we examine are OOP cost per day's supply of a medication, the days of medication supplied per capita, and the number of individuals filling prescriptions. We compare outcomes before vs. after January 2006, for those over age 66 years vs. for those age 58-64 years, adjusting for the under-reporting of certain cash-only transactions in the WKH data. Our results indicate that from 2005-2007, Part D reduced elderly OOP costs per day's supply of medicati...
June 2008Professional Partnerships and Matching in Obstetrics
with Andrew Epstein, Sean Nicholson: w14070
Theory indicates that internally-differentiated professional partnerships can promote matching between heterogeneous consumers and professionals, particularly when consumers have imperfect information or markets have barriers to referrals between firms. We test this in obstetrics markets, relying on random assignment of patients to physicians to generate unbiased measures of a physician's treatment style and skill, and on simulations to measure a physician's specialization. Consumers match to professionals along all three dimensions -- specialization, style and skill -- based on consumers' observed characteristics and unobserved preferences. We conclude that internally-differentiated partnerships promote matching in ways that improve consumers' welfare and health.
October 2003Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands and New Zealand
with Patricia M. Danzon: w10007
This paper describes three prototypical systems of therapeutic reference pricing (RP) for pharmaceuticals -- Germany, the Netherlands, and New Zealand -- and examines their effects on the availability of new drugs, reimbursement levels, manufacturer prices and out-of-pocket surcharges to patients. RP for pharmaceuticals is not simply analogous to a defined contribution approach to subsidizing insurance coverage. Although a major purpose of RP is to stimulate competition, theory suggests that this is unlikely and this is confirmed by the empirical evidence. Other effects of RP differ across countries in predictable ways, reflecting each country's system design and other cost control policies. New Zealand's RP system has reduced reimbursement and limited the availability of new drugs, partic...


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