Working Paper: NBER ID: w21072
Authors: David Powell; Rosalie Liccardo Pacula; Erin Taylor
Abstract: Drug overdoses involving opioid analgesics have increased dramatically since 1999, representing one of the United States’ top public health crises. Opioids have legitimate medical functions, but improving access may increase abuse rates even among those not prescribed the drugs given that opioids are frequently diverted to nonmedical use. We have little evidence about the causal relationship between increased medical access to opioids and spillovers resulting in abuse. We use the introduction of the Medicare Prescription Drug Benefit Program (Part D) as a large and differential shock to the geographic supply of opioids. We compare growth in opioid supply and abuse rates in states with large 65+ population shares to states with smaller elderly population shares with a focus on abuse among the Medicare-ineligible population. Part D increased opioid utilization for the 65+ population, and we show that this increase in utilization led to significant growth in the overall supply of opioids in high elderly share states relative to low elderly share states. This relative expansion in opioid supply resulted in an escalation in opioid-related substance abuse treatment admissions and opioid-related mortality among the Medicare-ineligible population, implying meaningful spillovers to individuals who did not experience any change in prescription drug benefits. The evidence suggests that increased opioid supply is associated with economically-important levels of diversion for nonmedical purposes. Our estimates imply that a 10% increase in medical opioid distribution leads to a 7.4% increase in opioid-related deaths and a 14.1% increase in substance abuse treatment admission rates for the Medicare-ineligible population.
Keywords: Opioids; Medicare Part D; Substance Abuse; Public Health
JEL Codes: I13; I18; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicare Part D (H51) | increased opioid utilization among the 65 and older population (J14) |
| increased opioid utilization among the 65 and older population (J14) | greater overall supply of opioids in states with a higher percentage of elderly residents (J26) |
| greater overall supply of opioids in states with a higher percentage of elderly residents (J26) | escalation in opioid-related substance abuse treatment admissions among the Medicare-ineligible population (I13) |
| greater overall supply of opioids in states with a higher percentage of elderly residents (J26) | escalation in opioid-related mortality rates among the Medicare-ineligible population (I12) |
| increased opioid supply (J20) | diversion for non-medical purposes (K42) |