TY  - JOUR
AU  - Yang,Zhou
AU  - Gilleskie,Donna B.
AU  - Norton,Edward C.
TI  - Prescription Drugs, Medical Care, and Health Outcomes: A Model of Elderly Health Dynamics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10964
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10964
L1  - http://www.nber.org/papers/w10964.pdf
N1  - Author contact info:
Zhou Yang
E-Mail: zhou.yang@ht.msu.edu

Donna B. Gilleskie
Department of Economics
University of North Carolina, Chapel Hill
CB #3305, 6B Gardner Hall
Chapel Hill, NC 27599-3305
Tel: 919/966-5372
Fax: 919/966-4986
E-Mail: donna_gilleskie@unc.edu

Edward C. Norton
Department of Health Management and Policy
Department of Economics
University of Michigan
School of Public Health
1415 Washington Heights, M3108 SPHII
Ann Arbor, MI 48109-2029
Tel: 734/615-5738
Fax: 734/764-4338
E-Mail: ecnorton@umich.edu
AB  - 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.
ER  -