The Impact of Medicare Part D Coverage on Mental Health

The Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 introduced prescription drug coverage (Medicare Part D) for seniors. The Part D program went into effect on January 1, 2006 and has significantly increased access to prescription drugs for seniors. Take up rates of Part D have been relatively high, especially among those who regularly used prescription drugs but lacked coverage prior to the implementation of Part D. Some estimates suggest that about a quarter of all seniors lacked coverage for prescription drugs prior to the implementation of Part D and most faced substantial out-of-pocket (OOP) payments. High OOP expenditures are a concern since they have been shown to be associated with non-adherence to medication schedules, which can lead to worse health and increased health services use in the long run. Medicare Part D has been successful in significantly increasing utilization of prescription drugs among enrollees, reducing out of pocket payments and decreasing cost-related non-adherence to medication schedules. However, the extent to which these changes in utilization translate to improved health is not known. While there is some evidence that Part D had no discernible impact on self-rated health and functional disability, the overall impact of this program on health has not been well studied. In this study, we contribute to this literature by evaluating the impact of the Part D program on mental health. Given the importance of prescription drugs in the treatment of mental health disorders, the Part D coverage expansion has the potential to significantly improve health. Moreover, depression has been shown to be sensitive to financial strain which would be alleviated by increased coverage.

 We use data from the 1994 through 2010 waves of Health and Retirement Study (HRS), a nationally representative survey of older adults. The dependent variable, a self-reported measure of depressive symptoms, is based on a shortened version of the Center for Epidemiologic Studies Depression Scale (CESD). To establish causality, we use a difference-in-difference (DD) approach that compares changes in CESD pre and post 2006 for persons aged 65-70 years (the “treatment” group) with changes in CESD for persons aged 60-64 years (the “control” group). We find that Medicare Part D significantly reduced depression among Medicare eligible persons compared to younger cohorts. We find no evidence of differential trends in CESD across these groups prior to the implementation of Part D, which supports our causal interpretation. We evaluate heterogeneous effects by race and ethnicity and by access to prescription drug coverage prior to the implementation of Part D. Finally, we discuss the implications of our findings for the insurance expansions introduced by the 2010 Affordable Care Act.