Is drug coverage a free lunch?
Subtitle: cross-price elasticities and the design of prescription drug benefits
By: Martin Gaynor, Jian Li, William B. Vogt.
Contributors: Li, Jian.; Vogt, William B.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 12758.; Working paper series (National Bureau of Economic Research) -- working paper no. 12758.
Publisher: National Bureau of Economic Research
Published: 2006
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 41
Subjects: Insurance, Pharmaceutical services -- United States -- Mathematical models; Drugs -- Prices -- United States -- Mathematical models
Description: "Recently, many US employers have adopted less generous prescription drug benefits.  In addition, the U.S.  began to offer prescription drug insurance to approximately 42 million Medicare beneficiaries in 2006.  We use data on individual health insurance claims and benefit data from 1997-2003 to study the effects of changing consumers' co-payments for prescription drugs on the quantity demanded and expenditure on prescription drugs, inpatient care and outpatient care.  We allow for 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 the use of and spending on prescription drugs.  However, consumers substitute the use of outpatient care and inpatient care for prescription drug use, and the expenditure reductions on prescription drugs are largely offset by the increases in other spending"--National Bureau of Economic Research web site.
Notes: "December 2006"

Includes bibliographical references (p. 25-29).

Also available in PDF from the NBER world wide web site (www.nber.org).