Prescription Drugs, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics
AbstractThere is much debate about whether the Medicare Prescription Drug Bill -- the greatest expansion of Medicare benefits since its creation in 1965 -- will improve the health of elderly Americans, and how much it will cost. We model how insurance affects medical care utilization, and subsequently, health outcomes over time in a dynamic model with correlated errors. Longitudinal individual-level data from the 1992-1998 Medicare Current Beneficiary Survey provide estimates of these effects. Simulations over five years show that expanding prescription drug coverage would increase drug expenditures by between 12% and 17%. However, other health care expenditures would only increase slightly, and the mortality rate would improve.
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Date of creation: Dec 2004
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Find related papers by JEL classification:
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- H5 - Public Economics - - National Government Expenditures and Related Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-20 (All new papers)
- NEP-CMP-2004-12-20 (Computational Economics)
- NEP-HEA-2004-12-20 (Health Economics)
- NEP-LTV-2004-12-20 (Unemployment, Inequality & Poverty)
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