Association for Public Policy Analysis & Management

This paper provides new evidence on the effect of patient cost-sharing on opioid drugs use and drug abuse related emergency room visits. To identify the causal effect, I use the closure of Medicare Part D coverage gap under affordable care act and the variation in the length of contracts among first time Medicare eligible individuals as exogenous sources of variations. The effect is estimated at two levels. First, I estimate the effect of closing the "donut-hole" on opioid drugs use and drug abuse related emergency room visits among Medicare beneficiaries. Second, linking Medicare beneficiaries with non-Medicare eligible co-residences, I evaluate its spillover effect on non-Medicare beneficiaries’ drug abuse related emergency room visits. The result indicates that closing Medicare Part D's coverage gap increases opioid use by 10.7 % at 5% level of statistical significance. Its effect on Medicare beneficiaries and younger than age 65 co-residences drug abuse related emergency room visits, however, is not statistically significant.