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Universal cash transfers and prescription utilization: Evidence from the Alaska permanent fund dividend

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  • Guettabi, Mouhcine
  • Witman, Allison

Abstract

We investigate the impact of a large cash transfer on prescription utilization. Our identification strategy leverages the Alaksa Permanent Fund Dividend (PFD), which is distributed annually in October and comprises 6% of the average household's annual income. We study the impact of the PFD on the use of prescription medications using a within-Alaska comparison group and difference-in-differences design. Using the IBM MarketScan Commercial Claims and Encounters Prescription Drug Database, we observe prescriptions for 50,866 commercially-insured individuals who filled prescriptions between 2013 and 2019. We find no changes in prescription use overall and are able to rule out changes larger than 0.5% in the week of the PFD and 1.4% the week after. Subgroup analyses find no changes by patient characteristics, degree of cost sharing, or prescription type. We also conduct a synthetic control analysis using a non-Alaska comparison group and find no effects of the PFD on prescriptions. These findings are useful for understanding liquidity sensitivity for prescription medication and the effects of cash distributions among individuals with employer-based health insurance.

Suggested Citation

  • Guettabi, Mouhcine & Witman, Allison, 2023. "Universal cash transfers and prescription utilization: Evidence from the Alaska permanent fund dividend," Journal of Health Economics, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jhecon:v:90:y:2023:i:c:s0167629623000358
    DOI: 10.1016/j.jhealeco.2023.102758
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    More about this item

    Keywords

    Cash transfer; Universal basic income; Prescriptions; Private health insurance;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I1 - Health, Education, and Welfare - - Health
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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