Open Enrollment Periods and Plan Choices

Open enrollment periods are pervasively used in insurance markets to limit adverse selection risks resulting when enrollees can switch plans at will. We exploit a change in the open enrollment rules of Medicare Part C and Part D to analyze how Medicare beneficiaries responded to the option of switching to 5-star rated plans at anytime, in a setting where insurers adjusted premiums and benefit design to counterbalance the increased selection risk. We find that within-year switches to 5-star plans increased by 7-16% and that those who switch are advantageously selected. Furthermore, demand for 5-star plans across the years did not change