Utilization Effects of Prescription Drug Benefits in an Aging Population

In this article, the effects of prescription drug coverage on use are analyzed for beneficiaries of a large retiree health benefit fund in a quasi-experiment comparing new and established enrollees. Newer enrollees show an 18-percentage point greater increase in prescription drug expenditures per capita than established enrollees during the 3-year period following enrollment. This differential is interpreted as the insurance effect of prescription coverage. The impact was greater among high-cost drugs than among low-cost drugs, and also greater among low users of prescription drugs than among high users. No clear patterns were discerned across therapeutic categories.