Working Paper: NBER ID: w10964
Authors: Zhou Yang; Donna B. Gilleskie; Edward C. Norton
Abstract: There is much debate about whether the Medicare Prescription Drug Bill -- the greatest expansion of Medicare benefits since its creation in 1965 -- will improve the health of elderly Americans, and how much it will cost. We model how insurance affects medical care utilization, and subsequently, health outcomes over time in a dynamic model with correlated errors. Longitudinal individual-level data from the 1992-1998 Medicare Current Beneficiary Survey provide estimates of these effects. Simulations over five years show that expanding prescription drug coverage would increase drug expenditures by between 12% and 17%. However, other health care expenditures would only increase slightly, and the mortality rate would improve.
Keywords: No keywords provided
JEL Codes: I12; I18; H5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| improved access to prescription drugs (H51) | enhance health status of Medicare beneficiaries (I18) |
| enhance health status of Medicare beneficiaries (I18) | lower mortality rates (I14) |
| increased prescription drug use (H51) | improved functional status (I14) |
| increased prescription drug use (H51) | reduced hospitalization rates (I14) |
| failure to account for dynamic nature of healthcare behavior (D91) | over- or underestimation of drug benefit's net financial costs (H51) |
| past medical care utilization (I11) | current health (I19) |
| current health (I19) | subsequent medical care consumption (I12) |
| expanding prescription drug coverage (H51) | increase in drug expenditures (H51) |