Prescription Drugs, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics

Zhou Yang, Donna B. Gilleskie, Edward C. Norton

NBER Working Paper No. 10964
Issued in December 2004
NBER Program(s):   AG   HE

There is much debate about whether the Medicare Prescription Drug Bill -- the greatest expansion of Medicare benefits since its creation in 1965 -- will improve the health of elderly Americans, and how much it will cost. We model how insurance affects medical care utilization, and subsequently, health outcomes over time in a dynamic model with correlated errors. Longitudinal individual-level data from the 1992-1998 Medicare Current Beneficiary Survey provide estimates of these effects. Simulations over five years show that expanding prescription drug coverage would increase drug expenditures by between 12% and 17%. However, other health care expenditures would only increase slightly, and the mortality rate would improve.

download in pdf format
   (374 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (374 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10964

Published: Yang, Zhou, Donna Gilleskie, and Edward Norton. “Health Insurance, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics.” Journal of Human Resources 44, 1 (2009): 47-114.

Users who downloaded this paper also downloaded these:
Kaestner and Khan w16011 Medicare Part D and its Effect on the Use of Prescription Drugs, Use of Other Health Care Services and Health of the Elderly
Ng, Norton, Guilkey, and Popkin w15864 Estimation of a Dynamic Model of Weight
Dor and Encinosa w10738 How Does Cost-Sharing Affect Drug Purchases? Insurance Regimes in the Private Market for Prescription Drugs
Han, Norton, and Powell w15027 Direct and Indirect Effects of Teenage Body Weight on Adult Wages
Shang and Goldman w13358 Prescription Drug Coverage and Elderly Medicare Spending
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us