Medicare Part D and its Effect on the Use of Prescription Drugs, Use of Other Health Care Services and Health of the Elderly

We examine the effect of gaining prescription drug insurance as a result of Medicare Part D on use of prescription drugs, use of other medical services, and health for a nationally representative sample of Medicare beneficiaries. Given the heightened importance of prescription drugs for those with chronic illness, we provide separate estimates for those in poorer health. We find that gaining prescription drug insurance through Medicare Part D was associated with a 70% increase in the number of annual prescriptions, but that obtaining prescription drug insurance is not significantly related to use of other health care services or health, as measured by functional status and self-reported health. Among those in poorer health, we find that gaining prescription drug insurance was associated with a 60% increase in the number of annual prescriptions, and is not significantly related to use of other services or health.