The Impact of Job and Insurance Loss on Prescription Drug use: A Panel Data Approach to Quantifying the Health Consequences of Unemployment During the Covid-19 Pandemic

Abstract

Due to the nature of health insurance in the United States, health care utilization is often tied to economic conditions, at both the individual and aggregate levels. This article examines how loss of employment may reduce medication adherence through the subsequent loss of insurance and income. At the individual level, the loss of employer-sponsored insurance is shown to be associated with lower prescription drug use and higher out-of-pocket expenditures. The rapid increase in unemployment during the COVID-19 pandemic provides a natural experiment to estimate the causal relationship between unemployment and prescription drug use at the aggregate level. In total, the growth in unemployment during the pandemic resulted in a 2.6% reduction in medication adherence and 57.5 million fewer prescriptions filled in 2020, with prescriptions declining for many chronic conditions. Unemployment-related reductions in prescription fills and medication adherence were highest in states without expanded Medicaid eligibility, further underscoring the importance of social safety nets such as Medicaid during times of economic hardship.