I have looked at the National Bureau of Economic Research (NBER) paper mentioned below, and suspect (and hope) that its key findings are wrong. I do not believe that people are always rational and well-informed. But I do believe that people have incentives to be rational and well-informed, especially on crucial issues related to their health.
The NBER paper says that given a modest increase in the price of a crucial drug (e.g., a statin), high-risk patients (e.g., with severe arteriosclerosis) will often stop taking the crucial drug, being “unaware of these risks.” I suspect that the policy conclusion that many will draw from the NBER paper is: don’t raise Medicare drug prices.
If the authors are right that high-risk Medicare beneficiaries are clueless, an alternative policy conclusion is: give the beneficiaries a clue.
(p. 7) The high cost of drugs can force some seniors to make difficult choices between paying for medications or other household expenses.
A . . . study by the National Bureau of Economic Research found that when Medicare beneficiaries’ out-of-pocket drug costs jump, there is a significant drop in the number of patients who fill prescriptions and an increase in mortality.
For the full commentary see:
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Dec. 22, 2021 [sic], and has the title “How to Cope With Medicare’s Rising Costs.”)
A revised version of the National Bureau of Economic Research paper mentioned above is: