The private health plans that administer the Medicare drug benefit use various tools to encourage the use of generic drugs in order to lower total drug spending. Higher generic drug use also appears to encourage consumers to continue taking their medications. This study examines how different drug plan benefit and formulary designs influence the selection of generic drugs to treat high cholesterol among Medicare beneficiaries. We found that a low copayment for generic statins is the strongest factor influencing the use of these drugs, and eliminating the copay altogether has an especially large effect. Other tools that have an effect are higher copays and prior authorization or "step therapy" requirements for popular brand-name statins. In this drug class, where generics can be readily substituted for brand-name drugs for most people, adoption of the policies most effective in encouraging generic use could lead to considerable savings for the plans, Medicare, and enrollees. We estimate that every 10 percent increase in the use of generic, rather than brand-name, statins would reduce Medicare costs by about $1 billion annually. Plans could apply the lessons from this analysis and consider a zero copay for use of generic drugs, and Medicare might consider further incentives for plans to use benefit designs that increase such drugs' use.T he costs of medications that are still covered by patents continue to rise faster than medical price inflation.
This report examines the extent, causes, and consequences of instability in public coverage programs for children and families. It focuses particularly on the phenomenon of "churning," which occurs when individuals lose and regain coverage in a short period of time. It also looks at strategies to make public program coverage more stable for children and families. Findings are drawn from a variety of sources, including national and state-based studies, roundtable discussions and interviews with stakeholders and experts, and an examination of the effect of state and local policies on instability and churning in four states: Louisiana, Rhode Island, Virginia, and Washington. The experiences of these states demonstrate that coverage instability can be averted to a significant degree by adopting key policies and procedures, like limiting the frequency of required renewals; developing easy, seamless transitions among public coverage programs; and setting affordable limits on premium costs. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the authors and not necessarily those of The Commonwealth Fund or its directors, officers, or staff. This report and other Fund publications are available online at www.cmwf.org. To learn more about new publications when they become available, visit the Fund's Web site and register to receive e-mail alerts. Commonwealth Fund pub. no. 935.iii CONTENTS
Data from the Census Bureau's Annual Report on Poverty show that 37.4 million Americans--two million more than the previous year--had no health insurance during 1992. The proportion of people with no health insurance also increased from 14.1 percent in 1991 to 14.7 percent in 1992. This is the largest annual increase--both in the number of people and the proportion of the population lacking health care coverage--since 1987, the first year for which comparable data are available. In 1987, the Census data show, 31 million people--12.9 percent of the population--were not covered by health insurance. Both the number of people and the proportion of the population without health insurance have increased each year since 1987. Not all of the changes from one year to the next were statistically significant. Between 1991 and 1992, however, the increases both in the number of people without insurance and the proportion of the population lacking insurance were statistically significant. The Bureau reported that 36.9 million Americans were poor in 1992, which represented the largest number of poor people in 30 years. Among the poor, 28.5 percent had no health insurance in 1992. Lack of insurance was not limited to the poor, however. Of those without insurance in 1992, more than 70 percent were above the poverty line.
Given the similarity of the two countries and their interconnections, one would expect Canadian employers to act much like their American counterparts, especially since firms from both countries often compete in the same markets using similar technologies (Verma and Thompson 1988). The similarities in the two countries and their integration through trade make it likely that the policy experiences of one have relevance for the other (Gunderson, Hyatt, and Pesando 1996). This chapter provides an introduction to some of the conceptual issues concerning compensation risk bearing by workers in labor markets. The following discussion provides background and is more abstract than the other chapters, which discuss the evidence concerning changes in risk bearing in particular aspects of compensation. This chapter provides a framework for thinking about some of the issues raised in the more applied chapters, and it concludes with an overview of the remainder of the book. COMPENSATION RISK BEARING IN LABOR MARKETS Conceptual Issues Risk is an element of all aspects of employee-employer relationships, including pay rates, working time, and employment security. The allocation of risk bearing determines the extent to which risks are borne by workers, by firms and their stockholders, and by government. Labor market risks may pose serious problems for some workers. Many workers have mortgages and large financial commitments for rearing and educating children. Fixed financial commitments become problems for workers who face decreases in income due to unemployment or decreased work hours, or increases in expenses due to medical bills not covered by health insurance. Employers face risks affecting their demand for labor due to changes in their factor markets, technology, exchange rates, international competition, domestic competition, the legal environment, tax policy, and macroeconomic conditions affecting demand for their product. Other demand-side factors that may affect workers' risk include
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