TY  - JOUR
AU  - Finkelstein,Amy
TI  - The Interaction of Partial Public Insurance Programs and Residual Private Insurance Markets: Evidence from the U.S. Medicare Program
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9031
PY  - 2002
Y2  - June 2002
UR  - http://www.nber.org/papers/w9031
L1  - http://www.nber.org/papers/w9031.pdf
N1  - Author contact info:
Amy Finkelstein
Department of Economics
MIT E52-274C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu
AB  - A ubiquitous form of government intervention in insurance markets is to provide compulsory, but partial, public insurance coverage and to allow voluntary purchases of supplementary insurance on the private market. Yet we know little about the effects of such programs on total insurance coverage and on welfare.  A primary concern is that the compulsory public insurance program - designed to counter the effects of adverse selection in the private insurance market - may in fact exacerbate adverse selection pressures in the residual private insurance market. Theoretically, however, these programs may either improve or impair the functioning of the residual private insurance market. To examine this question empirically, I investigate the effect of the U.S. Medicare program - which provides partial public health insurance to individuals aged 65 and over - on the private insurance market for prescription drugs, a benefit not provided by the public program.  The results suggest that Medicare does not have substantial spillover effects on residual private insurance markets. In particular, there is no evidence that Medicare is associated with increased adverse selection problems in the residual private health insurance market.
ER  -