Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services

Cbo.gov: 11/29/12

Previously, when estimating the budgetary effects of legislation regarding prescription drugs, CBO found insufficient evidence of an “offsetting” effect of prescription drug use on spending for medical services. Recently, CBO reviewed dozens of newer studies and determined a body of research now demonstrates a link between changes in prescription drug use and changes in the use of and spending for medical services. This report provides background information about that relationship; reviews the literature on the size of the offsetting effect for the Medicare population; and describes how CBO synthesized the recent research. The report also provides an example of how CBO’s change in methodology will affect its cost estimates for proposals that would change prescription drug use by Medicare beneficiaries. Read More