Attribute Substitution in Early Enrollment Decisions into Medicare Prescription Drug Plans

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Stand-alone outpatient prescription drug plans (PDPs), introduced in January 2006, have become the most popular source for coverage of outpatient prescription drugs under Medicare relative to other available Medicare plan types (e.g. Medicare Advantage drug plans). Using county-level enrollment figures from the Centers for Medicare & Medicaid Services linked to other public sources, we study attribute substitution in beneficiary decision-making with respect to PDP enrollment. To do so, we relate county-level PDP market share to county-level political support for the administration implementing the new benefit (the Bush Administration), controlling for socio-demographic and market characteristics. We find statistically significant evidence that greater support for the Bush administration is associated with increased PDP market share.

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