Medicare Part D and the Financial Protection of the Elderly
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We examine the impact of the expansion of public prescription-drug insurance coverage from Medicare Part D and find evidence of substantial crowd-out. Using the 2002-2007 waves of the Medical Expenditure Panel Survey, we estimate the extension of Part D benefits resulted in 75 percent crowd-out of both prescription-drug insurance coverage and expenditures of those 65 and older. Part D is associated with sizeable reductions in out-of-pocket spending, much of which has accrued to a small proportion of the elderly. On average, we estimate a welfare gain from Part D comparable to the deadweight cost of program financing. (JEL H51, I18, J14)
Date issued
2011-11Journal
American Economic Review
Publisher
American Economic Association
Citation
Engelhardt, Gary V, and Jonathan Gruber. “Medicare Part D and the Financial Protection of the Elderly.” American Economic Journal: Economic Policy 3.4 (2011): 77–102. © 2011 AEA
Version: Final published version
ISSN
0002-8282
1944-7981