caa a22 4500 37893175X CHVBK 20190511134022.0 cr unu---uuuuu 161128e20040101xx s 000 0 eng 10.2202/1558-9544.1051 doi (NATIONALLICENCE)gruyter-10.2202/1558-9544.1051 Adverse Selection and the Challenges to Stand-Alone Prescription Drug Insurance [Elektronische Daten] [Mark V. Pauly, Yuhui Zeng] This paper investigates a possible predictor of adverse selection problems in unsubsidized stand-alone prescription drug insurance: the persistence of an individual’s high spending over multiple years. Using Medstat claims data and data from the Medicare Survey of Current Beneficiaries, we find that persistence is much higher for outpatient drug expenses than for other categories of medical expenses. We then use these estimates to develop a simple and intuitive model of adverse selection in competitive insurance markets and show that this high relative persistence makes it unlikely that unsubsidized drug insurance can be offered for sale, even with premiums partially risk adjusted, without a probable adverse selection death spiral. We show that this outcome can be avoided if drug coverage is bundled with other coverage, and we briefly discuss the need either for comprehensive coverage or generous subsidies if adverse selection is to be avoided in private and Medicare insurance markets. ©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston Pauly Mark V. University of Pennsylvania and NBER aut Zeng Yuhui University of Pennsylvania aut Forum for Health Economics & Policy De Gruyter 7/1(2004-01-01) 7:1 2004 7 fhep https://doi.org/10.2202/1558-9544.1051 text/html Onlinezugriff via DOI 1 research article jats NATIONALLICENCE 856 40 https://doi.org/10.2202/1558-9544.1051 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Pauly Mark V. University of Pennsylvania and NBER aut NATIONALLICENCE 700 1- Zeng Yuhui University of Pennsylvania aut NATIONALLICENCE 773 0- Forum for Health Economics & Policy De Gruyter 7/1(2004-01-01) 7:1 2004 7 fhep CC0 http://creativecommons.org/publicdomain/zero/1.0 nationallicence SWISSBIB 080387160 BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-gruyter