Medicare beneficiaries and the impact of gaining prescription drug coverage on inpatient and physician spending.
OBJECTIVE
To assess whether gaining prescription drug coverage produces cost offsets in Medicare spending on inpatient and physician services.


METHODS
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.


METHODS
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.


RESULTS
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.
Briesacher
Becky A
BA
Division of Geriatric Medicine, University of Massachusetts Medical School, Worchester, MA 01605, USA.
Stuart
Bruce
B
Ren
Xiaoqang
X
Doshi
Jalpa A
JA
Wrobel
Marian V
MV
D000368:Aged; D000369:Aged, 80 and over; D014487:Centers for Medicare and Medicaid Services, U.S.; D005252:Fees, Pharmaceutical / Q000706:statistics & numerical data*; D005260:Female; D019538:Health Care Surveys; D005102:Health Expenditures / Q000145:classification / Q000706:statistics & numerical data*; D006760:Hospitalization / Q000191:economics*; D006801:Humans; D007345:Insurance Claim Review; D007356:Insurance, Pharmaceutical Services / Q000191:economics / Q000331:legislation & jurisprudence*; D008297:Male; D006278:Medicare / Q000331:legislation & jurisprudence*; D008875:Middle Aged; D017059:Models, Econometric; D009819:Office Visits / Q000191:economics* / Q000706:statistics & numerical data; D014481:United States