Medicaid Pharmaceuticals

Impact of drug coverage on mortality

Clayton 2019 is an interesting study on the impact of drug spending on Medicaid beneficiary mortality levels. The author uses variation in the roll out of Medicaid drug coverage by state across different Medicaid eligible groups in order to isolate plausibly exogenous variation in drug expenditures. Using this approach, Clayton finds that:

…a $1 increase in Medicaid drug expenditures per resident reduces mortality from internal causes by 2.0 deaths per hundred thousand, a decline of 0.23%. I find relatively large effects for: (1) medically-treated diseases which pose an immediate risk of death, (2) impoverished areas which received a disproportionate share of state Medicaid dollars, and (3) areas with a high ratio of medical to surgical physicians.

In short, improving drug coverage for the disadvantaged appears to have significant health benefits.

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