prescription-drug-price-project
Applied Econometrics Project, analysis conducted by R (markdown)
This study examines how insurance plans with different underlying prescription drug price affect individuals’ prescription drug expenditures—total payments made by all sources, including out-of-pocket and insurance payments. Analysis of a national medical expenditure survey reveals that insured people with Medicare/Part D and Private Health Insurance plans have significantly more Rx expenditure than individuals with Medicaid coverage only, largely driven by underlying price inequality.
When controlling for prescription drug utilization and other factors, on average, individuals enrolled in Medicare with or without Part D coverage spend around 48% more than Medicaid (only) enrollees in 2018, individuals with Private Health Insurance plans spent 35% more. The spending premium (%) for Medicare/Part D was smaller in 2017, around 30%. When further controlling for prescription drug type (in terms of Therapeutic class), on average, individuals with Medicare/Part D and PHI spent around 33% and 30% more than individuals with only Medicaid, respectively (in both 2017 and 2018). Since the out-of-pocket share is much lower for Medicaid than for other insurance plans, the underlying price inequality further increases the out-of-pocket burden for people with Medicare/Part D and PHI, especially for the elderly enrolled in Medicare and purchase prescription drug coverage themselves. We did not see any difference in prescription drug expenditures caused by the potential drug price difference between Medicaid only and Uninsured groups.
Overall, the findings suggest that the presumably higher drug price significantly increased the expenditures on prescription drugs for people with Medicare/Part D and Private Health Insurance plans. The effect is bigger for the elderly covered by Medicare with or without Part D.