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Short Title

Prescription Drug Use Among Older Adults

Abstract

To account for potential selection factors in the observed relationship between Medicare Part D coverage and prescription drug use, this study uses data from the 2010 and 2012 waves of the Health and Retirement Study (HRS) to first examine the determinants of Medicare Part D enrollment, paying particular attention to the role of functional health status on the enrollment decision. Next, the study assesses whether and to what extent Medicare Part D coverage moderates the effect of functional health status on prescription drug use and monthly out-of-pocket spending among older adults. As prior studies indicate, the findings reveal that individuals who take up Medicare Part D have poorer (functional) health relative to nonparticipants, and thus, exhibit greater demand for prescription drugs. Taking functional health status into account, Medicare Part D coverage is significantly associated with greater prescription drug use among those with few health limitations, and is also significantly associated with greater out-of-pocket spending among those with the most health limitations. Thus, while prior studies have compared Medicare eligible- to non-eligible individuals to find that Medicare Part D coverage significantly lowers out-of pocket costs, and therefore, increases prescription drug use, this study compared Medicare Part D enrollees to eligible non-enrollees to generate findings that imply that the presumed effect of Medicare Part D coverage on prescription drug use may be spurious. In turn, advocacy efforts may be best directed at ensuring that the existing coverage gaps in Medicare Part D are continually addressed.

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