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Medicare Part D and the Financial Protection of the Elderly

48 Pages Posted: 12 Jul 2010 Last revised: 24 Aug 2010

Gary V. Engelhardt

Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2010

Abstract

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.

Suggested Citation

Engelhardt, Gary V. and Gruber, Jonathan, Medicare Part D and the Financial Protection of the Elderly (July 2010). NBER Working Paper No. w16155. Available at SSRN: https://ssrn.com/abstract=1636134

Gary V. Engelhardt (Contact Author)

Syracuse University - Center for Policy Research ( email )

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Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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HOME PAGE: http://web.mit.edu/gruberj/www/

National Bureau of Economic Research (NBER)

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