The effect of prescription drug insurance on health behavior: Evidence from Medicare Part D

Abstract

This paper provides empirical evidence on the health behavior effect of prescription drug insurance. Using the difference in the regression discontinuity research design, I compare health behavior changes at age 65 before and after the introduction of Medicare Part D. I find that the implementation of Medicare Part D increased prescription drug insurance coverage and reduced out-of-pocket spending per prescription and the use of cardiovascular and metabolic therapeutic class drugs. I also find that Medicare Part D led to a 6.36 percentage point decrease in the probability of engaging in moderate physical exercise and a 27.4 percentage point decrease in the amount of time spent on moderate physical activity. It also increased the probability of being overweight by 5.75 percentage points. Its effects on vigorous and muscle-strengthening exercise both at the extensive and intensive margins, obesity, BMI, and cigarette consumption are not statistically significant.

Keywords: Medicare Part D; health behavior; moral hazard; prescription drugs; substitution.