Impact of prescription drug insurance on health care utilization and expenditures among elderly Medicare beneficiaries with depression

Depression among the elderly is a serious and debilitating condition that is associated with excess morbidity, mortality and health care costs. Elderly Medicare beneficiaries with depression are under-diagnosed and under-treated, and many factors are associated with the failure to adequately recognize and treat elderly individuals with depression. Empirical studies have indicated that cost-related non-adherence is a major barrier to pharmaceutical treatment among the Medicare population. Although prescription drug insurance has the potential to reduce financial barriers to optimal treatment of depression among the elderly, it is unknown whether depressed Medicare beneficiaries may respond differently to prescription drug coverage compared with non-depressed individuals. This study applied a variety of econometric techniques to data from the Medicare Current Beneficiary Survey to assess the impact of drug insurance on utilization of and expenditures on pharmaceuticals and other non-pharmaceutical health care services. The study examined the main effects of different types of insurance coverage, as well as depression and insurance-depression interactions on medical care utilization. The results of this analysis indicate that prescription drug coverage is associated with increased expenditures, although these increases may be due to selection effects. While the original hypothesis stated that drug coverage would be expected to decrease expenditures for non-pharmaceutical services, no association between drug coverage and non-pharmaceutical services was found. There is also evidence that depressed individuals may respond differently to different types of insurance when compared to non-depressed individuals. For example, among Medicaid beneficiaries, depression is negatively associated with drug expenditures. This finding contradicts the general observation that depression is associated with increased pharmaceutical expenditures.