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Digesting the doughnut hole

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  • Joyce, Geoffrey F.
  • Zissimopoulos, Julie
  • Goldman, Dana P.

Abstract

Despite its success, Medicare Part D has been widely criticized for the gap in coverage, the so-called “doughnut hole”. We compare the use of prescription drugs among beneficiaries subject to the coverage gap with usage among beneficiaries who are not exposed to it. We find that the coverage gap does, indeed, disrupt the use of prescription drugs among seniors with diabetes. But the declines in usage are modest and concentrated among higher cost, brand-name medications. Demand for high cost medications such as antipsychotics, antiasthmatics, and drugs of the central nervous system decline by 8–18% in the coverage gap, while use of lower cost medications with high generic penetration such as beta blockers, ACE inhibitors and antidepressants decline by 3–5% after reaching the gap. More importantly, lower adherence to medications is not associated with increases in medical service use.

Suggested Citation

  • Joyce, Geoffrey F. & Zissimopoulos, Julie & Goldman, Dana P., 2013. "Digesting the doughnut hole," Journal of Health Economics, Elsevier, vol. 32(6), pages 1345-1355.
    • Handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1345-1355
    DOI: 10.1016/j.jhealeco.2013.04.007
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    References listed on IDEAS

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    1. Jennifer M Polinski & William H Shrank & Haiden A Huskamp & Robert J Glynn & Joshua N Liberman & Sebastian Schneeweiss, 2011. "Changes in Drug Utilization during a Gap in Insurance Coverage: An Examination of the Medicare Part D Coverage Gap," PLOS Medicine, Public Library of Science, vol. 8(8), pages 1-12, August.
    2. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2007. "Patient Cost-Sharing, Hospitalization Offsets, and the Design of Optimal Health Insurance for the Elderly," NBER Working Papers 12972, National Bureau of Economic Research, Inc.
    3. Gaynor Martin & Li Jian & Vogt William B, 2007. "Substitution, Spending Offsets, and Prescription Drug Benefit Design," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-33, July.
    4. Robert Kaestner & Nasreen Khan, 2012. "Medicare Part D and Its Effect on the Use of Prescription Drugs and Use of Other Health Care Services of the Elderly," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(2), pages 253-279, March.
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    Cited by:

    1. Judith Liu & Yuting Zhang & Cameron M. Kaplan, 2023. "Effects of Medicare Part D coverage gap closure on utilization of branded and generic drugs," Health Economics, John Wiley & Sons, Ltd., vol. 32(3), pages 639-653, March.
    2. Liran Einav & Amy Finkelstein & Raymond Kluender & Paul Schrimpf, 2016. "Beyond Statistics: The Economic Content of Risk Scores," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 195-224, April.
    3. Naomi C. Sacks & James F. Burgess & Howard J. Cabral & Steven D. Pizer, 2017. "Myopic and Forward Looking Behavior in Branded Oral Anti‐Diabetic Medication Consumption: An Example from Medicare Part D," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 753-764, June.

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    More about this item

    Keywords

    Medicare Part D; Coverage gap; Prescription Drugs; Insurance Design; Price Elasticity;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • 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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