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Does cost sharing really reduce inappropriate prescriptions among the elderly?

Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Gemmill Toyama, Marin (2011) Does cost sharing really reduce inappropriate prescriptions among the elderly? Health Policy, 101 (2). pp. 195-208. ISSN 0168-8510

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Identification Number: 10.1016/j.healthpol.2010.09.001


Improving prescription drug quality is an essential health policy goal in modern health systems, though evidence on the available instruments to attain such a goal are scarce. Cost sharing has an arguable role in improving the likelihood of an individual obtaining an appropriate prescription. This paper empirically examines the effect of cost sharing for prescription drugs in some dimensions of medication-related quality, namely the probability of inappropriate prescription drug use. Using data from United States seniors from 1996 to 2005, we explore various specifications of the probability of obtaining an inappropriate prescription that corrects for sample selection, endogeneity, and unobserved heterogeneity. Our results suggest a small, but measurable, negative price elasticity for inappropriate drug use to average out-of-pocket drug costs. That is, we find that user fees reduce the use of inappropriate medications, however the elasticity of cost sharing is found to be lower than that of drugs in general. A relatively close to zero price elasticity suggests that expected prescription quality improvements from co-payments are small in the light of our evidence.

Item Type: Article
Official URL:
Additional Information: © 2010 Elsevier Ireland Ltd
Divisions: European Institute
Social Policy
LSE Health
Subjects: H Social Sciences > HB Economic Theory
R Medicine > RA Public aspects of medicine
JEL classification: I - Health, Education, and Welfare > I1 - Health
I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
Date Deposited: 20 Oct 2010 12:02
Last Modified: 20 Jun 2021 01:49

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