The anticipatory effects of Medicare Part D on drug utilization

Abby Alpert

Journal of Health Economics, 2016, vol. 49, issue C, 28-45

Abstract: While health care policies are frequently signed into law well before they are implemented, such lags are ignored in most empirical work. This paper demonstrates the importance of implementation lags in the context of Medicare Part D, the prescription drug benefit that took effect two years after it was signed into law. Exploiting the differential responses of chronic and acute drugs to anticipated future prices, I show that individuals reduced drug utilization for chronic but not acute drugs in anticipation of Part D's implementation. Accounting for this anticipatory response substantially reduces the estimated total treatment effect of Part D.

Keywords: Medicare Part D; Prescription drugs; Anticipation effects; Intertemporal substitution; Forward-looking behavior (search for similar items in EconPapers)
JEL-codes: H51 I13 I18 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (30)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:49:y:2016:i:c:p:28-45

DOI: 10.1016/j.jhealeco.2016.06.004

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