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The Effects of Drug Subsidies on Out-of Pocket Prescription Drug Expenditures by Seniors: Regional Evidence from Canada

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  • Thomas F. Crossley
  • Paul Grootendorst
  • Sule Korkmaz
  • Michael R. Veall

Abstract

Between 1970 and 1986 all Canadian provinces introduced some version of a prescription drug subsidy for those age 65 or over and since 1986, all the provinces have increased copayments or deductibles to some degree. Employing a first-order approximation to the welfare gains from a subsidy, we find evidence that these subsidies have been less redistributive than an absolute per household cash transfer but slightly more redistributive than a transfer that would increase each household's income by the same percentage. Such evidence may have relevance for predicting the redistributive effects of a potential national prescription drug plan for seniors in the United States.

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Bibliographic Info

Paper provided by McMaster University in its series Quantitative Studies in Economics and Population Research Reports with number 350.

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Length: 33 pages
Date of creation: Apr 2000
Date of revision:
Handle: RePEc:mcm:qseprr:350

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Keywords: Prescription drug subsidies; Incidence; Redistribution; Progressivity;

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References

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  1. Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 669-721, June.
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  3. P Grootendorst, 1999. "Beneficiary Cost Sharing Under Canadian Provincial Prescription Drug Benefit Programs: History and Assessment," Centre for Health Economics and Policy Analysis Working Paper Series 1999-10, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
  4. James Banks & Richard Blundell & Arthur Lewbel, 1994. "Tax reform and welfare measurement: do we need demand system estimation?," IFS Working Papers W94/11, Institute for Fiscal Studies.
  5. 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.
  6. Gruber, Jonathan & Hanratty, Maria, 1995. "The Labor-Market Effects of Introducing National Health Insurance: Evidence from Canada," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 163-73, April.
  7. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  8. 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.
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  10. Richard Blundell & Alan Duncan, 1998. "Kernel Regression in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 62-87.
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Cited by:
  1. Hai Zhong, 2007. "Equity in Pharmaceutical Utilization in Ontario: A Cross-Section and Over Time Analysis," Canadian Public Policy, University of Toronto Press, vol. 33(4), pages 487-508, December.
  2. Thomas F. Crossley & Paul V. Grootendorst & Michael R. Veall, 2003. "National Catastrophic Drug Insurance Revisited: Who Would Benefit from Senator Kirby's Recommendations?," Quantitative Studies in Economics and Population Research Reports 385, McMaster University.
  3. Hirschberg, J.G. & Lye, J.N. & Slottje, D.J., 2008. "Inferential methods for elasticity estimates," Journal of Econometrics, Elsevier, vol. 147(2), pages 299-315, December.
  4. William H. Crown & Ernst R. Berndt & Onur Baser & Stan N. Finkelstein & Whitney P. Witt & Jonathan Maguire & Kenan E. Haver, 2004. "Benefit Plan Design and Prescription Drug Utilization Among Asthmatics: Do Patient Copayments Matter?," NBER Chapters, in: Frontiers in Health Policy Research, Volume 7, pages 95-128 National Bureau of Economic Research, Inc.
  5. 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.
  6. Magnezi, Racheli & Weiss, Yossi & Cohen, Yossi & Shmueli, Amir, 2007. "Development of a capitation scale for IDF career soldiers in Israel," Health Policy, Elsevier, vol. 80(3), pages 459-464, March.
  7. Burcay Erus & Nazli Aktakke, 2012. "Impact of healthcare reforms on out-of-pocket health expenditures in Turkey for public insurees," The European Journal of Health Economics, Springer, vol. 13(3), pages 337-346, June.
  8. J. G. Hirschberg, J. N. Lye & D. J. Slottje, 2008. "Confidence Intervals for Estimates of Elasticities," Department of Economics - Working Papers Series 1053, The University of Melbourne.

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