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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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:
Contact details of provider:
Fax: (508) 793-3708
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)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baoping Shang & Dana P. Goldman, 2007. "Prescription Drug Coverage and Elderly Medicare Spending," NBER Working Papers 13358, National Bureau of Economic Research, Inc.
- Lee A. Lillard & Jeannette Rogowski & Raynard Kington, 1999.
"Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population,"
99-09, RAND Corporation Publications Department.
- Lillard, L.A. & Rogowski, J. & Kington, R., 1999. "Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population," Papers 99-09, RAND - Labor and Population Program.
- Pauly Mark V. & Zeng Yuhui, 2004. "Adverse Selection and the Challenges to Stand-Alone Prescription Drug Insurance," Forum for Health Economics & Policy, De Gruyter, vol. 7(1), pages 1-22, January.
- Tomas J. Philipson & Dana Goldman, 2007.
"Integrated Insurance Design in the Presence of Multiple Medical Technologies,"
American Economic Review,
American Economic Association, vol. 97(2), pages 427-432, May.
- Dana Goldman & Tomas Philipson, 2007. "Integrated Insurance Design in the Presence of Multiple Medical Technologies," NBER Working Papers 12870, National Bureau of Economic Research, Inc.
- Mark V. Pauly & Yuhui Zeng, 2004. "Adverse Selection and the Challenges to Stand-Alone Prescription Drug Insurance," NBER Chapters, in: Frontiers in Health Policy Research, Volume 7, pages 55-74 National Bureau of Economic Research, Inc.
- Goldman Dana P & Joyce Geoffrey F & Malkin Jesse Dylan, 2002. "The Costs of A Medicare Prescription Drug Benefit," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-18, April.
- Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
- Nasreen Khan & Robert Kaestner & Swu Jane Lin, 2007. "Prescription Drug Insurance and Its Effect on Utilization and Health of the Elderly," NBER Working Papers 12848, National Bureau of Economic Research, Inc.
- Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
- Olga Kiuila & Peter Mieszkowski, 2007. "The effects of income, education and age on health," Health Economics, John Wiley & Sons, Ltd., vol. 16(8), pages 781-798.
- Boyle, Melissa A. & Lahey, Joanna N., 2010. "Health insurance and the labor supply decisions of older workers: Evidence from a U.S. Department of Veterans Affairs expansion," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 467-478, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson).
If references are entirely missing, you can add them using this form.