RT Journal Article
SR Electronic
T1 Health Insurance, Medical Care, and Health Outcomes
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 47
OP 114
DO 10.3368/jhr.44.1.47
VO 44
IS 1
A1 Yang, Zhou
A1 Gilleskie, Donna B.
A1 Norton, Edward C.
YR 2009
UL http://jhr.uwpress.org/content/44/1/47.abstract
AB Prescription drug coverage creates a change in medical care consumption, beyond standard moral hazard, arising both from the differential cost-sharing and the relative effectiveness of different types of care. We model the dynamic supplemental health insurance decisions of Medicare beneficiaries, their medical care demand, and subsequent health outcomes over time. Using parameter estimates obtained with longitudinal individual-level data, we simulate behavior under different drug coverage scenarios. Prescription drug coverage increases drug expenditures by 7 percent to 27 percent over a five-year period. While mortality rates fall slightly, the survivors have poorer health, leading to higher total medical expenditures.