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Do Drug Plans Matter? Effects of Drug Plan Eligibility on Drug Use Among the Elderly, Social Assistance Recipients and the General Population

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  • Paul V. Grootendorst
  • Mitchell Levine

Abstract

The 1984 Canada Health Act does not require that the provinces subsidize prescription drugs. Many provinces do, however, provide categorical coverage to the elderly, social assistance recipients and others, although the generosity of coverage is highly variable. A system of parallel private insurance covers the non-elderly ineligible for social assistance. In this study, we assessed the socio- economic, health and demographic determinants of private drug insurance. We also assessed the effect of inter-provincial variations in drug insurance coverage for the elderly and low income on variations in drug insurance coverage for the elderly and low income on their drug use. In addition, using instrumental variables methods, we considered the effect of prescription drug insurance coverage status on drug use in the non-elderly population ineligible for social assistance. Consistent with the previous literature, we find that for most seniors and non-indigent, drug coverage has only minor effects on drug use. The drug use of social assistance recipients was, however, sensitive to even relatively modest copayments of $0-$6.

Suggested Citation

  • Paul V. Grootendorst & Mitchell Levine, 2002. "Do Drug Plans Matter? Effects of Drug Plan Eligibility on Drug Use Among the Elderly, Social Assistance Recipients and the General Population," Social and Economic Dimensions of an Aging Population Research Papers 73, McMaster University.
    • Handle: RePEc:mcm:sedapp:73
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    References listed on IDEAS

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    1. 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.
    2. Stephen Smith & Sheila Watson, 1990. "Modelling the effects of prescription charge rises," Fiscal Studies, Institute for Fiscal Studies, vol. 11(1), pages 75-91, February.
    3. Coulson, N Edward, et al, 1995. "Estimating the Moral-Hazard Effect of Supplemental Medical Insurance in the Demand for Prescription Drugs by the Elderly," American Economic Review, American Economic Association, vol. 85(2), pages 122-126, May.
    4. 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.
    5. Tomz, Michael & Wittenberg, Jason & King, Gary, 2003. "Clarify: Software for Interpreting and Presenting Statistical Results," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 8(i01).
    6. Ryan, Mandy & Birch, Stephen, 1991. "Charging for health care: Evidence on the utilisation of NHS prescribed drugs," Social Science & Medicine, Elsevier, vol. 33(6), pages 681-687, January.
    7. O'Brien, Bernie, 1989. "The effect of patient charges on the utilisation of prescription medicines," Journal of Health Economics, Elsevier, vol. 8(1), pages 109-132, March.
    8. Street, Andrew & Jones, Andrew & Furuta, Aya, 1999. "Cost-sharing and pharmaceutical utilisation and expenditure in Russia," Journal of Health Economics, Elsevier, vol. 18(4), pages 459-472, August.
    9. Jeremiah Hurley & Nancy Arbuthnot Johnson, 1991. "The Effects of Co-payments within Drug Reimbursement Programs," Canadian Public Policy, University of Toronto Press, vol. 17(4), pages 473-489, December.
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    Citations

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    Cited by:

    1. Filippini, M. & Masiero, G. & Moschetti, K., 2009. "Regional consumption of antibiotics: A demand system approach," Economic Modelling, Elsevier, vol. 26(6), pages 1389-1397, November.
    2. Alan, Sule & Crossley, Thomas F. & Grootendorst, Paul & Veall, Michael R., 2002. "The effects of drug subsidies on out-of-pocket prescription drug expenditures by seniors: regional evidence from Canada," Journal of Health Economics, Elsevier, vol. 21(5), pages 805-826, September.
    3. 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.
    4. Astrid Kiil & Kurt Houlberg, 2014. "How does copayment for health care services affect demand, health and redistribution? A systematic review of the empirical evidence from 1990 to 2011," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(8), pages 813-828, November.
    5. Paul V. Grootendorst & Michael R. Veall, 2005. "National Catastrophic Drug Insurance Revisited: Who Would Benefit from Senator Kirby's Recommendations?," Canadian Public Policy, University of Toronto Press, vol. 31(4), pages 341-358, December.

    More about this item

    Keywords

    prescription drug utilization; copayments; user fees; pharmaceutical cost control;

    JEL classification:

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

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