Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Explaining Utilization and Spending Differences

04/01/2000

There are a number of reasons why people with prescription drug coverage might have higher utilization and spending than people without coverage:

  • People who anticipate large drug expenditures might be more likely to seek drug coverage than people who do not expect to spend much on drugs. This phenomenon is known as adverse selection or self-selection.
  • More prescriptions, or prescriptions for more costly drugs, might be written for people with coverage. This could be because physicians consider a patient’s coverage when deciding on appropriate treatment. People with coverage may also be more likely to request drug therapies, especially more costly therapies. Higher demand by the consumer in these situations is also known as moral hazard.
  • People without coverage may be less likely to fill the prescriptions they receive, or they may make a prescription last longer by not taking the recommended dosage. Those who have no health insurance at all (a large share of the nonelderly without drug coverage) may never visit a physician to obtain a prescription in the first place. These problems will be referred to here as lack of access.

All of these factors probably play a part in the observed utilization and expenditure differences. They are notoriously difficult to disentangle, both for drugs and for medical care in general. Distinguishing between self-selection, moral hazard, and lack of access requires information about the relative quantity of drugs actually needed by people with and without coverage. This would require a much higher level of clinical detail than is available in the data used for this report. Some factors will be presented here to highlight fruitful areas for further analysis, not necessarily to resolve the issues. The emphasis will be on the Medicare population.

View full report

Preview
Download

"intro.pdf" (pdf, 23.11Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"C1.pdf" (pdf, 75.87Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"c2.pdf" (pdf, 169.02Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"c3.pdf" (pdf, 92Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"future.pdf" (pdf, 12.41Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"appena.PDF" (pdf, 149.34Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"appenb.pdf" (pdf, 27Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"appenc.pdf" (pdf, 25.44Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®