THE AFFORDABLE CARE ACT AND PRESCRIPTION DRUG EXPENDITURES: A COMPARISON OF THE NEAR ELDERLY AND ELDERLY
Allison, John Robert
To date, only a few studies have examined the effects of major policy shifts on individual spending on pharmaceuticals in the United States, and even fewer have analyzed the impact of the Affordable Care Act (ACA). In general, these studies have found that gains in insurance coverage, such as the gains seen in the wake of the ACA or Medicare Part D, lowers out-of-pocket expenditures on pharmaceuticals for the previously uninsured. This study seeks to address the same question from a different perspective by analyzing the relationship between the ACA and total and out-of-pocket expenditures on prescription drugs through comparing the near elderly (ages 60 to 65) and elderly enrolled in Medicare (ages 65 to 70). Using cross-sectional data from the 2012-2014 Medical Expenditure Panel Survey, I employ a difference-in-difference model to isolate the impact of the ACA on out-of-pocket and total expenditures before and after the policy change. My findings suggest that the ACA is associated with a reduction in the odds of out-of-pocket and total expenditures exceeding zero for the overall sample, but not for the treatment in 2014. However, for those in the treatment between 100 and 138 percent of the federal poverty level after the ACA, there was a significant increase in the odds of out-of-pocket expenditures exceeding zero, and a reduction in the odds of total expenditures exceeding zero.
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