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

Author

Listed:
  • 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 Polítiques 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%.

Suggested Citation

  • Jaume Puig-Junoy & Pilar Garcia-Gomez & David Casado-Marin, 2011. "Free Medicines thanks to Retirement: Moral Hazard and Hospitalization Offsets in an NHS," Tinbergen Institute Discussion Papers 11-108/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110108
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    References listed on IDEAS

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    1. 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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    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Valérie Paris & Marion Devaux & Lihan Wei, 2010. "Health Systems Institutional Characteristics: A Survey of 29 OECD Countries," OECD Health Working Papers 50, OECD Publishing.
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    More about this item

    Keywords

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

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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