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The anticipatory effects of Medicare Part D on drug utilization

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  • Alpert, Abby

Abstract

While health care policies are frequently signed into law well before they are implemented, such lags are ignored in most empirical work. This paper demonstrates the importance of implementation lags in the context of Medicare Part D, the prescription drug benefit that took effect two years after it was signed into law. Exploiting the differential responses of chronic and acute drugs to anticipated future prices, I show that individuals reduced drug utilization for chronic but not acute drugs in anticipation of Part D's implementation. Accounting for this anticipatory response substantially reduces the estimated total treatment effect of Part D.

Suggested Citation

  • Alpert, Abby, 2016. "The anticipatory effects of Medicare Part D on drug utilization," Journal of Health Economics, Elsevier, vol. 49(C), pages 28-45.
    • Handle: RePEc:eee:jhecon:v:49:y:2016:i:c:p:28-45
    DOI: 10.1016/j.jhealeco.2016.06.004
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    More about this item

    Keywords

    Medicare Part D; Prescription drugs; Anticipation effects; Intertemporal substitution; Forward-looking behavior;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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