Gaining Coverage Through Medicaid or Private Insurance Increased Prescription Use and Lowered Out-of-Pocket Spending

Published in: Health Affairs, 2016

Posted on RAND.org on August 19, 2016

by Andrew W. Mulcahy, Christine Eibner, Kenneth Finegold

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Research Questions

  1. What effect have coverage changes had on individuals' prescription drug utilization and out-of-pocket spending?
  2. How has insurance coverage changed among prescription drug users—particularly those with chronic conditions—due to the Affordable Care Act (ACA)?

A growing body of literature describes how the Affordable Care Act (ACA) has expanded health insurance coverage. What is less well known is how these coverage gains have affected populations that are at risk for high health spending. To investigate this issue, we used prescription transaction data for a panel of 6.7 million prescription drug users to compare changes in coverage, prescription fills, plan spending, and out-of-pocket spending before and after the implementation of the ACA's coverage expansion. We found a 30 percent reduction in the proportion of this population that was uninsured in 2014 compared to 2013. Uninsured people who gained private coverage filled, on average, 28 percent more prescriptions and had 29 percent less out-of-pocket spending per prescription in 2014 compared to 2013. Those who gained Medicaid coverage had larger increases in fill rates (79 percent) and reductions in out-of-pocket spending per prescription (58 percent). People who gained coverage who had at least one of the chronic conditions detailed in our study saw larger decreases in out-of-pocket spending compared to those who did not have at least one condition. These results demonstrate that by reducing financial barriers to care, the ACA has increased treatment rates while reducing out-of-pocket spending, particularly for people with chronic conditions.

Key Findings

  • After the ACA coverage expansion, the proportion of individuals without coverage in the study population fell by 30 percent.
  • People who gained insurance coverage filled more prescriptions; this was especially true for people who filled prescriptions for one of the five chronic conditions in the study.
  • Average out-of-pocket spending for individuals who gained coverage decreased significantly.
  • People who gained Medicaid coverage or who had one or more of the five study chronic conditions experienced deeper reductions in out-of-pocket spending than other groups.

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