Replication data for: Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap

Principal Investigator(s): View help for Principal Investigator(s) Marika Cabral; Neale Mahoney

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Project Citation:

Cabral, Marika, and Mahoney, Neale. Replication data for: Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113700V1

Project Description

Summary: Most health insurance uses cost-sharing to reduce excess utilization. Supplemental insurance can blunt the impact of this cost-sharing, increasing utilization and exerting a negative externality on the primary insurer. This paper estimates the effect of private Medigap supplemental insurance on public Medicare spending using Medigap premium discontinuities in local medical markets that span state boundaries. Using administrative data on the universe of Medicare beneficiaries, we estimate that Medigap increases an individual's Medicare spending by 22.2 percent. We calculate that a 15 percent tax on Medigap premiums generates savings of $12.9 billion annually with a standard error of $4.9 billion.

Scope of Project

JEL Classification:
      G22 Insurance; Insurance Companies; Actuarial Studies
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      H51 National Government Expenditures and Health
      I13 Health Insurance, Public and Private
      J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination

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V1 [2019-10-12]

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