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Distributional consequences of the transition from age-based to income-based prescription drug coverage in British Columbia, Canada

  • Gillian E. Hanley

    (Centre for Health Services and Policy Research, University of British Columbia, Vancouver, BC, Canada)

  • Steve Morgan

    (Centre for Health Services and Policy Research, University of British Columbia, Vancouver, BC, Canada)

  • Jeremiah Hurley
  • Eddy van Doorslaer

    (Department of Health Policy and Management, Erasmus University Medical Centre, Rotterdam, The Netherlands)

In May, 2003, British Columbia transitioned from an age-based public drug program, with public subsidy primarily based on age, to an age-irrelevant income-based drug program, in which public subsidy is based primarily on household income. As one of the specific aims of the policy change was to improve fairness by increasing the extent to which payment for drugs is based on ability to pay, we measure the progressivity of pharmaceutical financing before and after the policy change in BC using Kakwani indices. Our results suggest that pharmaceutical financing became less regressive after the policy change. However, this decrease in regressivity arose primarily because high-income seniors were making greater direct contributions to pharmaceutical financing and not because low-income households were making smaller direct contributions. Our results also suggest that if the public financing of pharmaceuticals were maintained or increased, a change from age-based to income-based eligibility can unambiguously improve equity in finance. As populations in developed countries age, governments will increasingly consider reforms to publicly financed health-care programs with age-based eligibility. In assessing policy options, financial equity is likely to be a key consideration. These results suggest that income-based pharmacare can improve financial equity especially when implemented with a commitment to maintain or increase public funding for prescription drugs. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1337
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 17 (2008)
Issue (Month): 12 ()
Pages: 1379-1392

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Handle: RePEc:wly:hlthec:v:17:y:2008:i:12:p:1379-1392
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "Equity in the finance of health care: some further international comparisons1," Journal of Health Economics, Elsevier, vol. 18(3), pages 263-290, June.
  2. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
  3. Puig-Junoy, Jaume, 2004. "Incentives and pharmaceutical reimbursement reforms in Spain," Health Policy, Elsevier, vol. 67(2), pages 149-165, February.
  4. Wagstaff, Adam & van Doorslaer, Eddy, 1992. "Equity in the finance of health care: Some international comparisons," Journal of Health Economics, Elsevier, vol. 11(4), pages 361-387, December.
  5. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-70, March.
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