The number of pages within the document is: 27
The self-declared author(s) is/are:
Original authors did not specify.
The subject is as follows:
Original authors did not specify.
The original URL is: LINK
The access date was:
2019-02-18 13:22:11.367301
Please be aware that this may be under copyright restrictions. Please send an email to admin@pharmacoengineering.com for any AI-generated issues.
Loading...
Reload document 
Open in new tab The content is as follows:
HEALTH INSURANCE AND THE GROWTH IN PHARMACEUTICAL EXPENDITURES* PATRICIA M. DANZON and MARK V. PAULY University of Pennsylvania ABSTRACT This paper examines the contribution of insurance coverage to the recent unprec- edented growth in spending on pharmaceuticals. Trends in drug spending over time closely paralleled the growth in drug coverage. Most of the coverage growth reflects an increase in the number of people with coverage, 65 percent from 1987 to 1996, rather than increased depth of coverage. The direct moral hazard effect of this in- surance growth accounts for between one-fourth and one-half of the increase in drug spending. Technological change contributed to these changes, because both the flow of new drugs increased the demand for insurance and information technologies en- abled the development of pharmacy benefit management, which reduced the real price of drug coverage. It is plausible that insurance growth also stimulated drug promotion. The only obvious source of inefficiency is the tax subsidy, which may lead to excessive insurance and promotion. This applies to all health care, not just pharmaceuticals. I. INTRODUCTION THE rapid growth of spending on pharmaceuticals in recent years has captured the attention of managers, policy makers, consumers, and analysts. Spending on outpatient drugs grew at a rate of 17 percent in 1999, compared with 8.2 percent in 1990 and 1.1 percent in 1980, whereas total health spend- ing grew at a rate of 3.3 percent in 1999, 6.4 percent in 1990, and 5.6 percent in 1980. Consequently, the share of total health spending accounted for by outpatient drugs increased from 4.9 percent in 1980 to 8.5 percent in 1999. Drug spending is also blamed for a resumption of increases in health insurance premiums, from .8 percent in 1996 to 8.3 percent in 2000.’ Previous analyses of these trends have provided an accounting decomposition of the growth in drug spending and have distinguished increases in volume of prescriptions (scripts), shifts to more expensive products, and price increases for existing products. In the 1990s, the dominant contributors to spending growth are * The authors thank Edward Buckley for research assistance. ‘Bradley C. Strunk, Paul B. Ginsburg, & Jon R. Gabel, Tracking Health Care Costs: Growth Accelerates Again in 2001, Health Aff. Web Exclusive (September 2002) (http:// www.healthaffairs.org/WebExclusives/2106Strunk.pdf). [Journal of Law and Economics, vol. XLV (October 2002)] ? 2002 by The University of Chicago. All rights reserved. 0022-2186/2002/4502-0012$01.50 587
Please note all content on this page was automatically generated via our AI-based algorithm (i3iyK5atwwzp1n4Zncqp). Please let us know if you find any errors.