Address correspondence to Becky Briesacher, Ph.D., Assistant Professor, Division of Geriatric Medicine, University of Massachusetts Medical School, Biotech Four, Suite 315, 377 Plantation Street, Worcester, MA 01605. Bruce Stuart, Ph.D., Professor and Director, and Xiaoqang Ren, M.S., Statistician, are with The Peter Lamy Center on Drug Therapy and Aging, University of Maryland School of Pharmacy, Baltimore, MD. Jalpa A. Doshi, Ph.D., Research Assistant Professor, General Internal Medicine, is with University of Pennsylvania, Philadelphia, PA. Marian V. Wrobel, Ph.D., is with Abt Associates Inc., Cambridge, MA.
Medicare Beneficiaries and the Impact of Gaining Prescription Drug Coverage on Inpatient and Physician Spending
Article first published online: 15 JUL 2005
Health Services Research
Volume 40, Issue 5p1, pages 1279–1296, October 2005
How to Cite
Briesacher, B. A., Stuart, B., Ren, X., Doshi, J. A. and Wrobel, M. V. (2005), Medicare Beneficiaries and the Impact of Gaining Prescription Drug Coverage on Inpatient and Physician Spending. Health Services Research, 40: 1279–1296. doi: 10.1111/j.1475-6773.2005.00432.x
- Issue published online: 15 JUL 2005
- Article first published online: 15 JUL 2005
- prescription drug coverage;
- physician expenditures;
- inpatient expenditures
Objective. To assess whether gaining prescription drug coverage produces cost offsets in Medicare spending on inpatient and physician services.
Data Source. Two-year panels constructed from 1995 to 2000 Medicare Current Beneficiary Survey, a dataset of Medicare claims and health care surveys from the Medicare population.
Study Design. We estimated a series of fixed-effects panel models to calculate adjusted changes in Medicare spending as drug coverage was acquired (Gainers) relative to the spending of beneficiaries who never had drug coverage (Nevers). Explanatory variables in the model include age, calendar year, income, and health status.
Principal Findings. Assessments of inpatient and physician services spending provided no evidence of overt selection behavior prior to the acquisition of drug coverage (i.e., there were no preswitch spikes in Medicare spending for Gainers). After enrollment, the medical spending of Gainers resembled those of beneficiaries who never had drug coverage. Overall, the multivariate models showed no systematic postenrollment changes in either inpatient or physician spending that could be attributed to the acquisition of drug coverage.
Conclusions. We found no consistent evidence that drug coverage either increases or reduces spending for hospital and physician services. This does not necessarily mean that drug therapy does not substitute for or complement other medical treatments, but rather that neither effect predominates across the Medicare population as a whole.