Medicare Part D and the Financial Protection of the Elderly
Gary V. Engelhardt
Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)
NBER Working Paper No. w16155
We examine the impact of the expansion of public prescription drug insurance coverage from Medicare Part D on the elderly and find evidence of substantial crowd-out. Using detailed data from the 2002-7 waves of the Medical Expenditure Panel Survey (MEPS), we estimate that the extension of Part D benefits resulted in 80% crowd-out of both prescription drug insurance coverage and prescription drug expenditures of those 65 and older. Part D is associated with only modest reductions in out-of-pocket spending. This suggests that the welfare gain from protecting the elderly from out-of-pocket spending risk through Part D has been small.
Number of Pages in PDF File: 48
Date posted: July 12, 2010
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