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Does Cost Sharing really Reduce Inappropriate Prescriptions?

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  • Joan Costa-i-Font
  • Marin Gemmill-Toyama

Abstract

This paper explores different empirical strategies to examine the effect of cost sharing for prescription drugs in some dimensions of medication-related quality, namely the probability of inappropriate prescription drug use among United States seniors. Using data from 1996 to 2005, we explore various specifications that correct for sample selection, endogeneity¸ and unobserved heterogeneity. We find a small, but measurable, negative price elasticity for inappropriate drug use with respect to self-reported average out-of-pocket costs for all drugs consumed. That is, user fees reduce the use of potentially inappropriate medications, however the elasticity of cost sharing is lower than that of drugs in general and the price elasticity is relatively close to zero, suggesting that any quality improvements from co-payments are small.

Suggested Citation

  • Joan Costa-i-Font & Marin Gemmill-Toyama, 2010. "Does Cost Sharing really Reduce Inappropriate Prescriptions?," CESifo Working Paper Series 3002, CESifo.
  • Handle: RePEc:ces:ceswps:_3002
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    References listed on IDEAS

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    1. 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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    7. Wong, M.D. & Andersen, R. & Sherbourne, C.D. & Hays, R.D. & Shapiro, M.F., 2001. "Effects of cost sharing on care seeking and health status: Results from the Medical Outcomes Study," American Journal of Public Health, American Public Health Association, vol. 91(11), pages 1889-1894.
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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