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

Author

Listed:
  • Nasreen Khan
  • Robert Kaestner
  • Swu Jane Lin

Abstract

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.

Suggested Citation

  • Nasreen Khan & Robert Kaestner & Swu Jane Lin, 2007. "Prescription Drug Insurance and Its Effect on Utilization and Health of the Elderly," NBER Working Papers 12848, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12848
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    References listed on IDEAS

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    1. Gowrisankaran Gautam & Town Robert & Barrette Eric, 2011. "Managed Care, Drug Benefits and Mortality: An Analysis of the Elderly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-32, January.
    2. 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.
    3. 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.
    4. Lillard, L.A. & Rogowski, J. & Kington, R., 1999. "Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population," Papers 99-09, RAND - Labor and Population Program.
    5. A. J. Culyer & J. P. Newhouse (ed.), 2000. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, edition 1, volume 1, number 1.
    6. Lillard, L.A. & Rogowski, J. & Kington, R., 1999. "Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population," Papers 99-09, RAND - Labor and Population Program.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Munkin M & Trivedi P. K, 2009. "Incentives and Selection Effects of Drug Coverage on Total Drug Expenditure: a Finite Mixture Approach," Health, Econometrics and Data Group (HEDG) Working Papers 09/22, HEDG, c/o Department of Economics, University of York.
    2. Qian Li & Pravin K. Trivedi, 2016. "Adverse and Advantageous Selection in the Medicare Supplemental Market: A Bayesian Analysis of Prescription drug Expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 192-211, February.
    3. Murat K. Munkin & Pravin K. Trivedi, 2010. "Disentangling incentives effects of insurance coverage from adverse selection in the case of drug expenditure: a finite mixture approach," Health Economics, John Wiley & Sons, Ltd., vol. 19(9), pages 1093-1108, September.
    4. Boyd H. Gilman & Barbara Gage & Susan Haber & Sonja Hoover & Jyoti Aggarwal, "undated". "Impact of Drug Coverage on Medical Expenditures Among the Elderly," Mathematica Policy Research Reports e75e5879b7284c5d9a80c0074, Mathematica Policy Research.
    5. Melissa Boyle, 2008. "Costs and Benefits of Elderly Prescription Drug Coverage: Evidence from Veterans’ Health Care," Working Papers 0803, College of the Holy Cross, Department of Economics.
    6. repec:mpr:mprres:5638 is not listed on IDEAS
    7. Shen, Yichen & Noguchi, Haruko, 2021. "Impacts of anticancer drug parity laws on mortality rates," Social Science & Medicine, Elsevier, vol. 272(C).

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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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