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Health Care Reform and Firm Dynamics: Evidence from Medicare Part D and the Retail Pharmacy Industry

Author

Listed:
  • Brandyn F. Churchill
  • Georgina Cisneros
  • Kelli R. Marquardt

Abstract

Health care reforms are often enacted before implementation, creating uncertainty that can shape firms’ decisions. We examine how Medicare Part D affected the retail pharmacy industry using 2000-2009 establishment-level data, leveraging the fact that Part D disproportionately affected counties with larger elderly populations. Consistent with predictions from a conceptual model in which pre-implementation uncertainty discourages entry and lower post-implementation margins prevent full recovery, we find that Part D was associated with a 5-percent reduction in pharmacies, driven by fewer openings rather than more closures. We also find suggestive evidence that reduced pharmacy access dampened Part D’s mortality benefits.

Suggested Citation

  • Brandyn F. Churchill & Georgina Cisneros & Kelli R. Marquardt, 2026. "Health Care Reform and Firm Dynamics: Evidence from Medicare Part D and the Retail Pharmacy Industry," NBER Working Papers 35380, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35380
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • 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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