Costs and Benefits of Elderly Prescription Drug Coverage: Evidence from Veterans’ Health Care
AbstractThis study tests the impact of a public prescription benefit on Medicare-eligible veterans, utilizing a mid-1990s benefit change in the VA health care system. Using data from the Medicare Current Beneficiary Survey, I compare prescription spending and utilization, as well as use of other health services and health outcomes for veterans and non-veterans before and after the VA insurance change. Results show that receipt of a publicly-provided prescription benefit leads to an increase in spending on prescriptions, and simultaneously, a decrease in spending on other medical services. On average, every $1 increase in drug spending is associated with a $6.50 decrease in other medical spending, and this change is accompanied by measured improvements in the health of benefit recipients. The benefit appears to accrue mainly to low-income and disabled individuals who typically have higher-than-average medical expenses, and are also more likely to experience substantial welfare gains from the relative income increase associated with the reduction (to zero) in the price of prescription drugs.
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Bibliographic InfoPaper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0803.
Length: 36 pages
Date of creation: Apr 2008
Date of revision:
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Web page: http://www.holycross.edu/departments/economics/website/
More information through EDIRC
Medicare; prescription drugs; elderly; veteran; VA healthcare;
Find related papers by JEL classification:
- I1 - Health, Education, and Welfare - - Health
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-04-12 (Economics of Ageing)
- NEP-ALL-2008-04-12 (All new papers)
- NEP-HEA-2008-04-12 (Health Economics)
- NEP-IAS-2008-04-12 (Insurance Economics)
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