Pharmaceutical Access, Functional Outcomes and Implications for Caregivers

One in four elderly Americans faces some limitation in activities of daily living (ADL), such as bathing, eating, or walking across a room. Such functional limitations can reduce elderly individuals’ labor force participation, worsen their health outcomes, and diminish their ability to live independently. Those with functional limitations are more likely to need in-home and nursing home care, for which Medicaid is the largest payer (Brown & Finkelstein, 2011). Moreover, seniors with poor functional outcomes often rely on informal (unpaid) caregiving from spouses and relatives, which decreases caregivers’ labor force participation (Kydland & Pretnar, 2019).
The objective of this project is to assess the impact of pharmaceutical access on elderly individuals’ functional outcomes and long-term care needs by exploiting exogenous increases in pharmaceutical access generated by the introduction of Medicare Part D in 2006. While a number of studies find that Part D improved clinical outcomes (Ayyagari, 2016; Ayyagari & Shane, 2015; Kaestner, Schiman, & Alexander, 2017), little is known about the policy’s impact on functional outcomes and long-term care utilization. I will answer these questions by conducting quasi-experimental analysis of nationally-representative survey data and administrative Medicare claims data. Preliminary results suggest that Part D improved functional outcomes among elderly beneficiaries and reduced their reliance on informal caregiving. These findings imply that increasing pharmaceutical access for the elderly not only improves their own functional outcomes, but may also have positive spillover effects for non-elderly caregivers.