NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Prescription Drug Insurance and Its Effect on Utilization and Health of the Elderly

Nasreen Khan, Robert Kaestner, Swu Jane Lin

NBER Working Paper No. 12848
Issued in January 2007
NBER Program(s):   AG   HE

The Medicare Modernization Act was recently established, to provide limited drug coverage to the elderly. However, there is limited evidence on how drug coverage might affect health. The goal of this paper is to obtain “causal effects” of prescription drug coverage on drug use, use of other medical services and health of the elderly. We use fixed-effects analysis to control for unmeasured person-specific effects that may confound the relationships of interest. Results show prescription drug coverage, particularly public coverage, significantly increased the utilization of prescription drugs, but had no discernable effect on hospital admissions or health.

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This paper was revised on June 11, 2007

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