Mergers and Acquisitions in Medicare Part D: Effects on Participation, Prescription Drug Use, and Out-of-Pocket Spending among Elderly

Pinka Chatterji, Professor of Economics, University at Albany
Chun-Yu Ho, Associate Professor of Economics, University at Albany

Background: The Medicare prescription drug program (Part D) was launched in 2006. Since then, the Part D market has experienced significant consolidation, driven by mergers and acquisitions and regulatory changes. The overarching goal of this project is to examine how this industry consolidation has affected Part D participation, out-of-pocket spending, and drug utilization, and racial disparities in these outcomes, through reducing plan variety and competition.

Aim 1: The first aim is to document geographic variation in Medicare Part D market characteristics from 2006-2022. We will examine Part D market characteristics across geography and time, focusing on Centers for Medicare and Medicaid Services markets with the largest shares of minority racial/ethnic elderly populations. This approach will allow us to gauge descriptively whether trends in market consolidation are different in geographic areas with versus without high minority elderly populations.
Aim 2: The second aim is to formally test whether Part D market consolidation affects market-level plan characteristics (e.g., premiums, quality), as well as racial disparities in prescription drug use and out-of-pocket spending on drugs among elderly individuals.