# Thread: How to estimate demand curve for Medicare?

1. Good post? |

## How to estimate demand curve for Medicare?

I am thinking of conducting a RCT to estimate the demand curve for Medicare. Could someone point me to the relevant literature on this topic? Thank you.

2. Good post? |
What exactly is the demand that you are trying to estimate? Medicare is funded by a mandatory 2.9% payroll tax (up to ~\$110k). Workers can only (legally) avoid the tax by not working (even self-employed have to pay into it, although they get a tax break on the "employer" portion).

The recipients of Medicare--the elderly and disabled--generally do not pay for the benefits when they are eligible to receive it (you have to pay an out-of-pocket if you haven't worked a certain number of years).

So what is the demand curve that you are trying to estimate?

3. Good post? |
I shouldn't have said medicare. (This is an experiment to estimate the demand for health insurance in a developing country and I thought the parallel would be medicare in the US). Here's the experiment: take a sample and randomly allocate them to different prices and then see at what price they would buy the product. Is there any theoretical work that you can point me to that discusses the advantages and disadvantages of various methods of such an estimation exercise?

Originally Posted by OneArmedEcon
What exactly is the demand that you are trying to estimate? Medicare is funded by a mandatory 2.9% payroll tax (up to ~\$110k). Workers can only (legally) avoid the tax by not working (even self-employed have to pay into it, although they get a tax break on the "employer" portion).

The recipients of Medicare--the elderly and disabled--generally do not pay for the benefits when they are eligible to receive it (you have to pay an out-of-pocket if you haven't worked a certain number of years).

So what is the demand curve that you are trying to estimate?

4. Good post? |
You want to estimate demand for health insurance using an experiment where you charge difference prices to different people for the same product in a developing country?

Every time I see these developing country savings/crop insurance/ etc. field experiments I am always confused as to why they wasted so much money figuring out time discounting preferences of malawian tobacco farmers or whatever else they are looking at... sure, the experiment might be internally valid, but I don't believe it adds much other insight to any debate and from speaking to these researchers informally it always sounds as if the presence of these researchers is more problematic and disruptive than helpful in any way - thus imposing costs on the locals far greater than the social benefit the research provides. Some of the stories are horrific with wives being beaten for making the 'wrong' choice, or selecting out of the experiment for the same reason.

Also, as OneArmedEcon said Medicare is not the right paralell.

5. Good post? |
I would consult academic marketing journals, as this seems to be more along the lines of something they would do. Possible keyword might be "optimal price points." I don't know if there's anything that would distinguish health insurance from other (presumably) highly inelastic goods other than maybe that I strongly expect that you'll see a significant gender differential (i.e., on average women are more willing to pay more for it than men).

There are currently 1 users browsing this thread. (0 members and 1 guests)

#### Posting Permissions

• You may not post new threads
• You may not post replies
• You may not post attachments
• You may not edit your posts
•

SEO by vBSEO ©2010, Crawlability, Inc.