How Do Prescription Drugs Affect the Use of Other Health Services?

Over the past decade, the availability of prescription drugs has increased, particularly for the elderly. Medicare Part D expanded coverage to include prescription drugs, and the Affordable Care Act (ACA) enhanced Part D’s coverage. While lowering the cost of prescription drugs would obviously encourage more use of medications, the implications of such changes for the rest of the health care market are less clear. The answer depends on whether drugs are “substitutes” for other care or “complements.” Drugs could be substitutes if they prevent deterioration in health conditions that would otherwise require more intensive care, such as surgery. However, in many ways, drugs may be complements to other care, adding value to other tools in the clinician’s toolbox. To explore this issue, this brief examines the use of health services before and after the introduction of Part D. The discussion proceeds as follows. The first section provides background on Part D and summarizes previous reesearch on how it affects the use of other health services. The second section explains the data and methodology used in this study. The third section shows the main results. The final section concludes that broadening the availability of drugs increases the use of office-based health care, with a possible decline in the use of inpatient facilities.