The Impact of Medicare Part D on Social Security Disability Insurance Beneficiaries

Amitabh Chandra, Ning Fu, Seth A. Seabury

NBER Disability Research Center Paper No. NB 17-12
Issued in July 2017

The introduction of Medicare Part D in 2006 provided access to prescription drug coverage to all Medicare beneficiaries, including those under 65 who were eligible through the Social Security Disability Insurance (SSDI). We used data from the Medical Expenditure Panel Study (MEPS) from 2001-2009 to examine the impact of Part D coverage on prescription drug spending, drug utilization and health of SSDI beneficiaries. We also considered the effect on other healthcare utilization and self-reported health. Using a difference-in-differences design, we compared outcomes between SSDI beneficiaries and those with private insurance to estimate the net impact of the program and to over 65 Medicare beneficiaries to estimate the differential impact between aged and disabled beneficiaries. We found that Part D increased spending on prescription drugs by SSDI beneficiaries by $909.5 compared to the privately insured and by $524 compared to aged Medicare beneficiaries. However, there was no increase in the number of medication fills, suggesting potential substation to more expensive medications. The effects were similar between those with and without dual Medicaid eligibility. Out-of-pocket spending decreased significantly for SSDI beneficiaries, particularly for those without dual-eligibility. Healthcare utilization decreased and self-reported health improved. There was no indication that the pool of SSDI beneficiaries changed because of the availability of prescription drug coverage based on observable factors.

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