The Effect of Health Insurance on Prescription Drug Use Among Low-Income Adults:Evidence from Recent Medicaid Expansions

J Health Econ. 2019 Jan:63:64-80. doi: 10.1016/j.jhealeco.2018.11.002. Epub 2018 Nov 6.


This study examines how subsidized coverage affects prescription drug utilization among low-income non-elderly adults. Using the Affordable Care Act's Medicaid expansions as a source of variation and a national, all-payer pharmacy transactions database, we find that within the first 15 months of new health insurance availability, aggregate Medicaid-paid prescriptions increased 19 percent, amounting to nearly 9 new prescriptions a year, per new enrollee. We find no evidence of reductions in uninsured or privately-insured prescriptions, suggesting that new coverage did not simply substitute for other payment sources. The largest increases occurred for medications treating conditions such as diabetes and heart disease, suggesting greater price elasticity for chronic medications. Generics increased more than brand-name drugs; and utilization increased less in expansion states with higher Medicaid drug copayments. Overall, these findings suggest that prescription drug demand among low-income populations exhibits substantial price sensitivity, and insurance expansion can increase medication treatment for chronic conditions.

Keywords: Affordable Care Act; Health insurance; Medicaid; Prescription drugs.

Publication types

  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • Adult
  • Drug Costs / statistics & numerical data
  • Drugs, Generic / economics
  • Drugs, Generic / therapeutic use
  • Humans
  • Insurance, Health / statistics & numerical data*
  • Medicaid / statistics & numerical data*
  • Patient Protection and Affordable Care Act
  • Poverty / statistics & numerical data*
  • Prescription Drugs / economics
  • Prescription Drugs / therapeutic use*
  • United States


  • Drugs, Generic
  • Prescription Drugs