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Prescription Drug Insurance and Its Effect on Utilization and Health of the Elderly

  • Nasreen Khan
  • Robert Kaestner
  • Swu Jane Lin

The Medicare Modernization Act was recently established, to provide limited drug coverage to the elderly. However, there is limited evidence on how drug coverage might affect health. The goal of this paper is to obtain "causal effects" of prescription drug coverage on drug use, use of other medical services and health of the elderly. We use fixed-effects analysis to control for unmeasured person-specific effects that may confound the relationships of interest. Results show prescription drug coverage, particularly public coverage, significantly increased the utilization of prescription drugs, but had no discernable effect on hospital admissions or health.

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File URL: http://www.nber.org/papers/w12848.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12848.

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Date of creation: Jan 2007
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Handle: RePEc:nbr:nberwo:12848
Note: AG HE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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  1. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
  2. Lee A. Lillard & Jeannette Rogowski & Raynard Kington, 1999. "Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population," Working Papers 99-09, RAND Corporation Publications Department.
  3. Mark G. Duggan, 2003. "Does Medicaid Pay Too Much for Prescription Drugs? A Case Study of Atypical Anti-Psychotics," NBER Working Papers 9626, National Bureau of Economic Research, Inc.
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