Substitution, Spending Offsets, and Prescription Drug Benefit Design

Martin Gaynor, Li Jian () and William Vogt ()
Additional contact information
Li Jian: Carnegie Mellon University

Forum for Health Economics & Policy, 2007, vol. 10, issue 2, 33

Abstract: Many U.S. employers have recently adopted less generous prescription drug benefits. In addition, in 2006 the U.S. began to offer prescription drug insurance to approximately 42 million Medicare beneficiaries. We used data on individual health insurance claims and benefit data from 1997 to 2003 to study how changes in consumers' co-payments for prescription drugs affect use of and expenditure on prescription drugs, inpatient care, and outpatient care. We analyzed the effects both in the year of the co-payment change and in the year following the change. Our results show that increases in prescription drug prices reduce both use of and spending on prescription drugs. They also show that consumers substitute the use of outpatient care for prescription drug use and that about 35% of the expenditure reductions on prescription drugs are offset by increases in other spending.

Keywords: pharmaceutical; drug; demand; copay; copayment; benefit; offset; spending (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
https://doi.org/10.2202/1558-9544.1084 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:fhecpo:v:10:y:2007:i:2:n:4

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/fhep/html

DOI: 10.2202/1558-9544.1084

Access Statistics for this article

Forum for Health Economics & Policy is currently edited by Dana Goldman

More articles in Forum for Health Economics & Policy from De Gruyter
Bibliographic data for series maintained by Peter Golla ().