When politicians and policymakers worry about the cost of health care, the affordability of prescription medications is often front and center. Given the present focus on prescription drug costs, it may surprise some readers to learn that medications were not included in the original Medicare program enacted in 1965; there were not enough expensive drug treatments to concern policymakers. Indeed, it was nearly 40 years until drug benefits were finally included in Medicare coverage in 2006.

If you have watched television at all in recent years you have probably noticed advertising for antidepressant medication. The commercials typically begin by describing symptoms that viewers may experience and suggesting that they might be suffering from depression, without even knowing it. At the end, interested viewers are told to ask their doctors about a certain drug that could provide help.

Based on BFI Working Paper No. 2017-05, “Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA,” by Pietro Tebaldi, assistant professor of economics at the University of Chicago

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