Medicare Part D and the Financial Protection of the Elderly

Gary V. Engelhardt and Jonathan Gruber

No 16155, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H51 I18 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
Note: AG EH PE
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Citations: View citations in EconPapers (6)

Published as “Medicare Part D and the Financial Protection of the Elderly,” American Economic Journal: Economic Policy , 3(4), November 2011, p. 77 - 102 (with Gary Engelhardt).

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