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Does cost sharing really reduce inappropriate prescriptions among the elderly?

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  • Costa Font, Joan
  • Gemmill Toyama, Marin

Abstract

Improving prescription drug quality is an essential health policy goal in modern health systems, though evidence on the available instruments to attain such a goal are scarce. Cost sharing has an arguable role in improving the likelihood of an individual obtaining an appropriate prescription. This paper empirically examines the effect of cost sharing for prescription drugs in some dimensions of medication-related quality, namely the probability of inappropriate prescription drug use. Using data from United States seniors from 1996 to 2005, we explore various specifications of the probability of obtaining an inappropriate prescription that corrects for sample selection, endogeneity, and unobserved heterogeneity. Our results suggest a small, but measurable, negative price elasticity for inappropriate drug use to average out-of-pocket drug costs. That is, we find that user fees reduce the use of inappropriate medications, however the elasticity of cost sharing is found to be lower than that of drugs in general. A relatively close to zero price elasticity suggests that expected prescription quality improvements from co-payments are small in the light of our evidence.

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Bibliographic Info

Article provided by Elsevier in its journal Health Policy.

Volume (Year): 101 (2011)
Issue (Month): 2 (July)
Pages: 195-208

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Handle: RePEc:eee:hepoli:v:101:y:2011:i:2:p:195-208

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Web page: http://www.elsevier.com/locate/healthpol

Related research

Keywords: Inappropriate prescriptions Cost sharing Pharmaceutical expenditure Quality of care;

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  1. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
  2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  3. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 287-305, April.
  4. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  5. Gabriel A. Picone & Frank A. Sloan & Shin-Yi Chou & Donald H. Taylor, 2003. "Does Higher Hospital Cost Imply Higher Quality of Care?," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 51-62, February.
  6. Li, Xin & Guh, Daphne & Lacaille, Diane & Esdaile, John & Anis, Aslam H., 2007. "The impact of cost sharing of prescription drug expenditures on health care utilization by the elderly: Own- and cross-price elasticities," Health Policy, Elsevier, vol. 82(3), pages 340-347, August.
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