The Impact of Closing Medicare Part D Coverage Gap on Mental Health of Adults Over Age 65

Using Medical Expenditure Panel Survey data from 2006 to 2019, this study assessed the effect of closing Medicare Part D coverage gap on mental health of older adults. We employed difference-in-differences and compared mental health outcomes of older adults on Medicare with those on private insurance before and after the 2011 policy change. Findings showed a 0.447-point reduction in the Kessler Index 6 (K-6) score after closure. These findings were mainly attributable to women, Hispanics, individuals with multiple chronic conditions, and those in Traditional Medicare. A reduction in out-of-pocket (OOP) expenditures appeared to be the primary mechanism for this finding. Our analysis was robust to several specifications, including using different measures of mental health and alternate constructions of treatment and control groups. The closure of the Medicare Part D coverage gap improved mental health among beneficiaries, potentially by reducing financial strain associated with high OOP expenditures.