Distributional consequences of the transition from age‐based to income‐based prescription drug coverage in British Columbia, Canada

Abstract

In May, 2003, British Columbia transitioned from an age-based public drug program, with public subsidy primarily based on age, to an age-irrelevant income-based drug program, in which public subsidy is based primarily on household income. As one of the specific aims of the policy change was to improve fairness by increasing the extent to which payment for drugs is based on ability to pay, we measure the progressivity of pharmaceutical financing before and after the policy change in BC using Kakwani indices. Our results suggest that pharmaceutical financing became less regressive after the policy change. However, this decrease in regressivity arose primarily because high-income seniors were making greater direct contributions to pharmaceutical financing and not because low-income households were making smaller direct contributions. Our results also suggest that if the public financing of pharmaceuticals were maintained or increased, a change from age-based to income-based eligibility can unambiguously improve equity in finance. As populations in developed countries age, governments will increasingly consider reforms to publicly financed health-care programs with age-based eligibility. In assessing policy options, financial equity is likely to be a key consideration. These results suggest that income-based pharmacare can improve financial equity especially when implemented with a commitment to maintain or increase public funding for prescription drugs.

Determinantes de la equidad en el financiamiento de los medicamentos en Argentina: un estudio empírico

“…En particular, estructuras demográficas con mayor porcentaje de mayores a 65 años tendrán esquemas de financiamiento relativamente más regresivos, ya que tienen mayor proporción de población que es pasiva en el mercado de trabajo y a la vez muy demandante de medicamentos por tener una mayor prevalencia de enfermedades 15,18 . A su vez, más población de mayores se asoció con menos población de menores a 14 años de edad, vinculada fuertemente a una menor pobreza y mayor cobertura de salud, indicadores que suelen ser utilizados para focalizar el gasto público.…”

“…Sin embargo, existen pocos trabajos empíricos que cuantifiquen el efecto de estos determinantes (entre otros, ver 5,6,7,14,15 ) y falta avanzar para comprender la importancia relativa de estos determinantes, información de gran relevancia para el diseño de políticas públicas. Como determinantes socioeconómicos suelen mencionarse el nivel y la distribución de los ingresos, el nivel de empleo, de pobreza, de cobertura formal de salud, el perfil epidemiológico de la población y los precios de los medicamentos 5,13,16 .…”

The Changing Role of Government in Financing Health Care: An International Perspective

“…Alan et al (2005) 1969-1996 Canada While program effects are muted when there are high deductibles, a nonsenior prescription drug subsidy is more redistributive than an equal-cost proportional income transfer, partly because of differential private HI coverage by income. Hanley et al (2008) 2000-2004 Canada Pharmaceutical financing became less regressive after the policy change. Results suggest that if the public financing of pharmaceuticals were maintained or increased, a change from age-based to income-based eligibility can unambiguously improve equity in financing.…”

“…In 2003, the province switched from age-based coverage to an income-based coverage program where the amount of coverage, deductible, and cost sharing varied by family income. The explicit goals of the policy change were a) to make the provincial drug program more sustainable and b) to increase fairness and equity within the drug program (Hanley et al 2008). A review of the equity consequences of the shift from age-to needs-based coverage suggests that the coverage change did result in a less regressive drug program in British Columbia in terms of the out-ofpocket funds paid for drugs.…”

“…This change was driven by an increase in the out-of-pocket costs paid by higher-income seniors following the policy change. Although the overall effect was to make the program less regressive, the average out-of-pocket costs for l ow-income households also increased (Hanley et al 2008). Apart from targeted public drug insurance programs, the government of Canada provides significant subsidy for the purchase of voluntary health insurance through the tax code.…”