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Under the standard Medicare Part D benefit structure, copayments for medications change discontinuously at certain levels of accumulative drug spending. Beneficiaries pay 25% of the cost of medications in the initial phase, 100% in the coverage gap, and 5% in the catastrophic phase. We examine whether individuals anticipate these copayment changes and adjust their consumption in advance. We use variation...
The Medicare prescription drug program (Part D) standard benefit includes deductible, initial coverage, coverage gap and catastrophic coverage phases. As beneficiaries enter each phase, their out‐of‐pocket medication costs change discontinuously. The benefit cycle restarts on 1 January of the next year. Taking advantage of variation in drug coverage, we study how individuals reinitiate discontinued...
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