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Costs and Benefits of Elderly Prescription Drug Coverage: Evidence from Veterans’ Health Care

Author

Listed:
  • Melissa Boyle

    (Department of Economics, College of the Holy Cross)

Abstract
This study tests the impact of a public prescription benefit on Medicare-eligible veterans, utilizing a mid-1990s benefit change in the VA health care system. Using data from the Medicare Current Beneficiary Survey, I compare prescription spending and utilization, as well as use of other health services and health outcomes for veterans and non-veterans before and after the VA insurance change. Results show that receipt of a publicly-provided prescription benefit leads to an increase in spending on prescriptions, and simultaneously, a decrease in spending on other medical services. On average, every $1 increase in drug spending is associated with a $6.50 decrease in other medical spending, and this change is accompanied by measured improvements in the health of benefit recipients. The benefit appears to accrue mainly to low-income and disabled individuals who typically have higher-than-average medical expenses, and are also more likely to experience substantial welfare gains from the relative income increase associated with the reduction (to zero) in the price of prescription drugs.

Suggested Citation

  • Melissa Boyle, 2008. "Costs and Benefits of Elderly Prescription Drug Coverage: Evidence from Veterans’ Health Care," Working Papers 0803, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:0803
    as

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    File URL: https://hcapps.holycross.edu/hcs/RePEc/hcx/HC0803-Boyle_PrescriptionDrugs.pdf
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    References listed on IDEAS

    as
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    6. Lillard, L.A. & Rogowski, J. & Kington, R., 1999. "Insurance Coverage for Prescription Drugs: Effects on Use and Expenditures in the Medicare Population," Papers 99-09, RAND - Labor and Population Program.
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    11. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
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    Cited by:

    1. Boyle, Melissa A. & Lahey, Joanna N., 2010. "Health insurance and the labor supply decisions of older workers: Evidence from a U.S. Department of Veterans Affairs expansion," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 467-478, August.

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    More about this item

    Keywords

    Medicare; prescription drugs; elderly; veteran; VA healthcare;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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