We examine the impact of the expansion of public prescription-drug insurance coverage from Medicare Part D and find evidence of substantial crowd-out. Using the 2002-2007 waves of the Medical Expenditure Panel Survey, we estimate the extension of Part D benefits resulted in 75 percent crowd-out...

The Medicare Modernization Act of 2003 added the Part D prescription drug benefit to the Medicare program. This addition, which became effective in 2006, increased Medicare program costs by more than 10 percent in order to provide, for the first time, prescription drug coverage to enrollees....