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Medicare Part D and the Financial Protection of the Elderly

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  • Gary V. Engelhardt
  • Jonathan Gruber
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    Abstract

    We examine the impact of the expansion of public prescription-drug insurance coverage from Medicare Part D and find evidence of substantial crowd-out. Using the 2002-2007 waves of the Medical Expenditure Panel Survey, we estimate the extension of Part D benefits resulted in 75 percent crowd-out of both prescription-drug insurance coverage and expenditures of those 65 and older. Part D is associated with sizeable reductions in out-of-pocket spending, much of which has accrued to a small proportion of the elderly. On average, we estimate a welfare gain from Part D comparable to the deadweight cost of program financing. (JEL H51, I18, J14)

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

    Volume (Year): 3 (2011)
    Issue (Month): 4 (November)
    Pages: 77-102

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    Handle: RePEc:aea:aejpol:v:3:y:2011:i:4:p:77-102

    Note: DOI: 10.1257/pol.3.4.77
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    1. Daniel Feenberg & Jonathan Skinner, 1992. "The Risk and Duration of Catastrophic Health Care Expenditures," NBER Working Papers 4147, National Bureau of Economic Research, Inc.
    2. Jonathan D. Ketcham & Kosali Simon, 2008. "Medicare Part D's Effects on Elderly Drug Costs and Utilization," NBER Working Papers 14326, National Bureau of Economic Research, Inc.
    3. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
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    Cited by:
    1. Kristopher J. Hult & Tomas J. Philipson, 2012. "Public Liabilities and Health Care Policy," NBER Working Papers 18571, National Bureau of Economic Research, Inc.
    2. Heiss, Florian & Leive, Adam & McFadden, Daniel L. & Winter, Joachim, 2013. "Plan selection in Medicare Part D: Evidence from administrative data," Munich Reprints in Economics, University of Munich, Department of Economics 19428, University of Munich, Department of Economics.
    3. Gabriela Flores & Owen O'Donnell, 2013. "Catastrophic Medical Expenditure Risk," CESifo Working Paper Series 4198, CESifo Group Munich.
    4. Gabriela Flores & Owen O'Donnell, 2012. "Catastrophic Medical Expenditure Risk," Tinbergen Institute Discussion Papers 12-078/3, Tinbergen Institute.
    5. Robert Kaestner & Cuiping Long & G. Caleb Alexander, 2014. "Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D," NBER Working Papers 19948, National Bureau of Economic Research, Inc.

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