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Free Medicines thanks to Retirement: Moral Hazard and Hospitalization Offsets in an NHS

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  • Jaume Puig-Junoy

    (Universitat Pompeu Fabra, and Research Centre for Economics and Health (CRES), Barcelona, Spain)

  • Pilar Garcia-Gomez

    (Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands)

  • David Casado-Marin

    (Institut d'Avaluacio de Pol�tiques Publiques (IVALUA), Barcelona, Spain)

Abstract

This paper examines the impact of coinsurance exemption for prescription medicines applied to elderly individuals in Spain after retirement. To evaluate this coinsurance change we use a rich administrative dataset that links pharmaceutical consumption and hospital discharge records for the full population aged 58 to 65 in January 2004 covered by the public insurer in a Spanish region and we follow them until December 2006. We use a difference-in-differences strategy and exploit the eligibility age for Social Security to control for the endogeneity of the retirement decision. Our most conservative results show that the uniform exemption from pharmaceutical copayment granted to retired people in Spain increases the consumption of prescription medicines on average by 9.5%, total pharmaceutical expenditure by 15.2% and the costs borne by the insurer by 47.5%, without evidence of any offset effect in the form of reduced hospitalization. The impact is concentrated among individuals who were consumers of medicines for acute and other non-chronic diseases with a previous coinsurance rate in the range 30% to 40%.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-108/3.

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Date of creation: 29 Jul 2011
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Handle: RePEc:dgr:uvatin:20110108

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Web page: http://www.tinbergen.nl

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Keywords: pharmaceuticals; cost sharing; hospitalization offsets; health care expenditure;

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  1. Barros, Pedro Pita & Machado, Matilde P. & Sanz-de-Galdeano, Anna, 2008. "Moral hazard and the demand for health services: A matching estimator approach," Journal of Health Economics, Elsevier, vol. 27(4), pages 1006-1025, July.
  2. Vincenzo Atella & Franco Peracchi & Domenico Depalo & Claudio Rossetti, 2006. "Drug compliance, co-payment and health outcomes: evidence from a panel of Italian patients," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 875-892.
  3. Leibowitz, Arleen & Manning, Willard G. & Newhouse, Joseph P., 1985. "The demand for prescription drugs as a function of cost-sharing," Social Science & Medicine, Elsevier, vol. 21(10), pages 1063-1069, January.
  4. Michele Boldrin & Sergi Jiménez-Martín & Franco Peracchi, 2004. "Micro-Modeling of Retirement Behavior in Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 499-578 National Bureau of Economic Research, Inc.
  5. Katherine Baicker & Dana Goldman, 2011. "Patient Cost-Sharing and Healthcare Spending Growth," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 47-68, Spring.
  6. Paul V. Grootendorst, 1997. "Health care policy evaluation using longitudinal insurance claims data: An application of the Panel Tobit estimator," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 365-382.
  7. Jaume Puig Junoy, 1988. "Gasto farmacéutico en España: efectos de la participación del usuario en el coste," Investigaciones Economicas, Fundación SEPI, vol. 12(1), pages 45-68, January.
  8. Marin C. Gemmill & Joan Costa-Font & Alistair McGuire, 2007. "In search of a corrected prescription drug Elasticity estimate: a meta-regression approach," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 627-643.
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