Medicare Part D and the Financial Protection of the Elderly

Gary V. Engelhardt and Jonathan Gruber

American Economic Journal: Economic Policy, 2011, vol. 3, issue 4, 77-102

Abstract: 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)

JEL-codes: H51 I18 J14 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/pol.3.4.77
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Citations: View citations in EconPapers (47)

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