The Effects of the Medicaid Expansion on Prescription Drug Behavior

The objective of this empirical exercise was to examine how drug providers in states that implemented the Medicaid expansion in 2014 reacted to the expansion compared with providers in states where Medicare was not expanded. Medicaid beneficiaries have been susceptible to higher cost and lower quality of health care. The Affordable Care Act increased access to drugs for uninsured people. Numerous studies highlighted the effects of the Medicaid expansion on beneficiaries. However, there is a gap in the literature that looks at prescription behavior of physicians during the Medicaid expansion that compared expanded states versus nonexpanded states. A difference-in-differences regression was used to estimate the average treatment effect of implementing the Medicaid expansion on each of the 6 outcomes of interest: (1) total cost of prescribing drugs, (2) number of total drug claims for non-Medicaid beneficiaries, (3) number of drug claims for Medicaid beneficiaries, (4) number of beneficiaries, (5) number of beneficiaries who were 65 years old or older, and (6) ratio of brand-name drugs. To address potential estimation biases, a matching procedure was used to ensure that pre- and post-Medicaid period trends were parallel. Our results provide evidence that, on average, the Medicaid expansion led each provider in expanded states prescribed more drugs for beneficiaries with low-income subsidies, whereas prescribed less drugs for other beneficiaries including those over 65 years old. The authors also show the proportion of brand-name drugs prescribed by a provider in expanded states declined due to the implementation of the Medicaid expansion. These results suggests that the Medicaid expansion has contributed to increasing access to health care by low-income citizens who were in need of prescriptions.