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Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D

Author

Listed:
  • Robert Kaestner
  • Cuping Schiman
  • G. Caleb Alexander

Abstract

We used Medicare administrative data (2002–2009) and an instrumental variables design that exploits the natural experiment created by the implementation of Medicare Part D to estimate the effect of prescription drug coverage insurance on the use and costs of inpatient services. We find that gaining prescription drug insurance through Part D caused approximately a 4 percent decrease in hospital admission rate, a 2–5 percent decrease in Medicare inpatient payments per person, and a 10–15 percent decrease in inpatient charges. Among specific types of admissions, gaining insurance was associated with significant decreases in admissions for CHF and COPD.

Suggested Citation

  • Robert Kaestner & Cuping Schiman & G. Caleb Alexander, 2019. "Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(3), pages 595-628, September.
    • Handle: RePEc:bla:jrinsu:v:86:y:2019:i:3:p:595-628
    DOI: 10.1111/jori.12229
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    Cited by:

    1. Sarah Miller & Norman Johnson & Laura R Wherry, 2021. "Medicaid and Mortality: New Evidence From Linked Survey and Administrative Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1783-1829.
    2. Ang, Ricardo B., 2025. "Expanded prescription coverage and opioid use disorders: Evidence from Medicare Part D," Economics & Human Biology, Elsevier, vol. 59(C).
    3. Jeffrey Diebold, 2018. "The Effects of Medicare Part D on Health Outcomes of Newly Covered Medicare Beneficiaries," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 73(5), pages 890-900.
    4. Daniel Kaliski, 2025. "Household debt, self-insurance, and subjective medical expenses risk," Empirical Economics, Springer, vol. 68(3), pages 1191-1231, March.
    5. Tianyan Hu & Sandra L. Decker & Shin-Yi Chou, 2017. "The impact of health insurance expansion on physician treatment choice: Medicare Part D and physician prescribing," International Journal of Health Economics and Management, Springer, vol. 17(3), pages 333-358, September.
    6. Américo, Pedro & Rocha, Rudi, 2020. "Subsidizing access to prescription drugs and health outcomes: The case of diabetes," Journal of Health Economics, Elsevier, vol. 72(C).
    7. Aaron Barkley, 2023. "The Human Cost of Collusion: Health Effects of a Mexican Insulin Cartel," Journal of the European Economic Association, European Economic Association, vol. 21(5), pages 1865-1904.
    8. Abraham Abebe Asfaw, 2019. "The effect of prescription drug insurance on health behavior: Evidence from Medicare Part D," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 403-418, March.
    9. Padmaja Ayyagari & Daifeng He, 2017. "The Role of Medical Expenditure Risk in Portfolio Allocation Decisions," Health Economics, John Wiley & Sons, Ltd., vol. 26(11), pages 1447-1458, November.
    10. Shi, Julie & Yang, Wanyu & Yuan, Ye, 2025. "Cover more for less: Targeted drug coverage, chronic disease management, and medical spending," Journal of Development Economics, Elsevier, vol. 172(C).
    11. Tianyan Hu & Sandra L. Decker & Shin-Yi Chou, 2014. "The Impact of Health Insurance Expansion on Physician Treatment Choice: Medicare Part D and Physician Prescribing," NBER Working Papers 20708, National Bureau of Economic Research, Inc.
    12. Sebastian Tello Trillo & Ausmita Ghosh & Kosali Simon & Johanna Catherine Maclean, 2015. "Losing Medicaid: What happens to hospitalizations?," NBER Working Papers 21580, National Bureau of Economic Research, Inc.
    13. Wang, Chao & Li, Qing & Sweetman, Arthur & Hurley, Jeremiah, 2015. "Mandatory universal drug plan, access to health care and health: Evidence from Canada," Journal of Health Economics, Elsevier, vol. 44(C), pages 80-96.
    14. Shen, Yichen & Noguchi, Haruko, 2021. "Impacts of anticancer drug parity laws on mortality rates," Social Science & Medicine, Elsevier, vol. 272(C).
    15. Ausmita Ghosh & Kosali Simon & Benjamin D. Sommers, 2017. "The Effect of State Medicaid Expansions on Prescription Drug Use: Evidence from the Affordable Care Act," NBER Working Papers 23044, National Bureau of Economic Research, Inc.
    16. Huh, Jason & Reif, Julian, 2017. "Did Medicare Part D reduce mortality?," Journal of Health Economics, Elsevier, vol. 53(C), pages 17-37.
    17. Padmaja Ayyagari & Dan M. Shane & George L. Wehby, 2017. "The Impact of Medicare Part D on Emergency Department Visits," Health Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 536-544, April.
    18. Padmaja Ayyagari, 2016. "Prescription drug coverage and chronic pain," International Journal of Health Economics and Management, Springer, vol. 16(2), pages 189-200, June.
    19. Abe Dunn & Adam Hale Shapiro, 2019. "Does Medicare Part D Save Lives?," American Journal of Health Economics, University of Chicago Press, vol. 5(1), pages 126-164, Winter.
    20. Chiara Orsini, 2019. "The mortality effects of changing public funding for home health care: An empirical analysis of Medicare home health care in the United States," Health Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 921-936, July.
    21. Clayton, Denise Hammock, 2019. "The Effect of Prescription Drug Coverage on Mortality: Evidence from Medicaid Implementation," Journal of Health Economics, Elsevier, vol. 63(C), pages 100-113.
    22. Ayyagari, Padmaja & Shane, Dan M., 2015. "Does prescription drug coverage improve mental health? Evidence from Medicare Part D," Journal of Health Economics, Elsevier, vol. 41(C), pages 46-58.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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