Health care policy evaluation using longitudinal insurance claims data: An application of the Panel Tobit estimator

Abstract

The British Columbia Ministry of Health provides enhanced prescription drug insurance coverage to residents aged 65 and older. This exogenous change in the effective price of prescription drugs is used to investigate aspects of the drug use by seniors. Three sets of issues are of interest. First, what is the effect of enhanced insurance coverage on drug use and programme costs once drugs are provided free of charge? Second, is this effect permanent, or transitory? Third, are any increases in use observed concentrated among those with lower incomes? Longitudinal administrative claims payment data on 18,000 seniors over the period 1985-92 are used. All individuals in the sample turned 65 at some point and therefore became eligible for subsidized prescription drugs. Health status information is not collected; instead, health status is treated as an individual-specific fixed endowment, subject to a common rate of decay. Estimation is complicated by censoring of real drug expenditures for those under 65, rendering 'first differencing' methods invalid. A semi-parametric fixed effects Tobit estimator is used instead. For most individuals, the extension of insurance does not permanently increase drug use. Males with lower income were the exception. Little evidence of transitory effects to insurance coverage was found. Finally, the extension of insurance has made only a minor contribution to growth in seniors' drug use, relative to secular growth in drug use over time.

Effects of Prescription Drug User Fees on Drug and Health Services Use and on Health Status in Vulnerable Populations: A Systematic Review of the Evidence

“…Grootendorst and colleagues (16) estimated elasticities for the number of different drugs consumed with respect to drug fees to be in the range of -0.11 to -0.13 in a population with lower health status. Low-income single elderly men in British Columbia were particularly responsive to drug fees (elasticity of approximately -0.50), although low-income single elderly women were much less price responsive (17). These values are broadly in line with a study from Belgium with an elasticity estimate of -0.40 for low-income retirees (33).…”

“…Virtually every article we reviewed supports the view that cost sharing through the use of copayments or deductibles decreases the use of prescription drugs by the poor and the chronically ill. All these studies are observational, raising the possibility that the observed negative correlation between drug fees and drug use is due to their respective correlation with a third, unmeasured variable. Nevertheless, the conclusions of these studies were largely invariant with respect to the study design used: cross-sectional with regression-based adjustment for differences in subject characteristics (12,16,25,31); before-and-after time series, with regression controls for secular time trends and other covariates (15,17,20,23,32,33); or time series with an external comparison group not exposed to changes in drug prices that was thought to be otherwise similar to the group that was exposed (11,18,21,26,28). Only one study-the one showing no effect of drug prices on prescription pickup rates from pharmacies (34)-failed to use any form of statistical adjustment.…”

Use of cervical cancer screening among insured women: the extent of missed opportunities

“…These databases include insurance-reimbursement claims by both inpatient and outpatient health providers and have been widely used to measure use of preventive and curative health services, quality of care, and for health-care policy analysis [18][19][20]. The MarketScan database links paid claims and encounter data to patient information across sites and types of health-care providers.…”

What impact do prescription drug charges have on efficiency and equity? Evidence from high-income countries

“…In general, the literature also found that having any form of insurance coverage (as opposed to none) increased total prescription drug expenditure. However, a Canadian study found that the provision of free prescription drugs for individuals aged 65 and over did not increase total prescription drug expenditure [ 26 ]. This result may be related to the fact that the author was only able to control for the unhealthiest respondents in the first year of the sample.…”