The impact of Medicare part D on income-related inequality in pharmaceutical expenditure

Natalie Carvalho,Linkun Chen,Joshua A Salomon,Dennis Petrie,Philip Clarke

doi:10.1186/s12939-019-0955-9

Abstract

BackgroundIncome-related inequality measures such as the concentration index are often used to describe the unequal distribution of health, health care access, or expenditure in a single measure. This study demonstrates the use of such measures to evaluate the distributional impact of changes in health insurance coverage. We use the example of Medicare Part D in the United States, which increased access to prescription medications for Medicare beneficiaries from 2006.MethodsUsing pooled cross-sectional samples from the Medical Expenditure Panel Survey for 1997–2011, we estimated income-related inequality in drug expenditures over time using the concentration and generalised concentration indices. A difference-in-differences analysis investigated the change in inequality in drug expenditures, as measured using the concentration index and generalised concentration index, between the elderly (over 65 years) and near-elderly (54–63 years) pre- and post-implementation of Medicare Part D.ResultsMedicare Part D increased public drug expenditure while out-of-pocket and private spending fell. Public drug expenditures favoured the poor during all study periods, but the degree of pro-poorness declined in the years immediately following the implementation of Part D, with the poor gaining less than the rich in both relative and absolute terms. Part D also appeared to result in a fall in the pro-richness of private insurance drug expenditure in absolute terms but have minimal distributional impact on out-of-pocket expenditure. These effects appeared to be short lived, with a return to the prevailing trends in both concentration and generalised concentration indices several years following the start of Part D.ConclusionsThe implementation of Medicare Part D significantly reduced the degree of pro-poorness in public drug expenditure. The poor gained less of the increased public drug expenditure than the rich in both relative and absolute terms. This study demonstrates how income-related inequality measures can be used to estimate the impact of health system changes on inequalities in health expenditure and provides a guide for future evaluations.

Highlights

Income-related inequality measures such as the concentration index are often used to describe the unequal distribution of health and health care access in a single measure
Looking at the change in public drug expenditure following Medicare Part D by income decile, we found the middle and upper income groups among the over 65 s received most of the absolute increase in public drug expenditure between 2003 and 05 and 2006–08 (Additional file 1: Figure S5)
We show that increased public spending on prescription drugs in the years following the implementation of Part D were consumed more by the rich than the poor among those over 65 and as a result, the degree of pro-poor inequality in public drug expenditures fell immediately following the implementation of Part D

Summary

Introduction

Income-related inequality measures such as the concentration index are often used to describe the unequal distribution of health, health care access, or expenditure in a single measure. Income-related inequality measures such as the concentration index are often used to describe the unequal distribution of health and health care access in a single measure. Carvalho et al International Journal for Equity in Health (2019) 18:57 use of such measures to evaluate changes in the degree of progressivity in health care expenditures as a result of implementation of the Medicare prescription drug benefit (Part D) in the U.S. Medicare part D prescription drug program Medicare is a national social insurance program covering 46 million adults aged 65 years or older and 9 million younger adults with permanent disabilities [9]. Despite some initial difficulties in Part D uptake in early 2006, and enrolment was voluntary for Medicare-eligible citizens not dually enrolled in Medicaid [12], by 2015, an estimated 42 million Medicare beneficiaries were enrolled in Medicare drug plans, representing about 76% of all eligible beneficiaries [10]

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