Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness

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Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness

Teresa B. Gibson, PhDThomson Healthcare, Ann Arbor, MI

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2©2007 Thomson Healthcare. All rights reserved.

Background

• Children represent over one-quarter of nonelderly enrollees in private health plans in the US. (Medical Expenditure Panel Survey, 2005)

• Children are dependent upon parents (or legal guardians) to mediate the health care delivery system on their behalf

– Child is principal (P), parent is agent (A)

– This interaction differs from many principal-agent (P-A) interactions:

• The Principal is largely incapable of managing/supervising the Agent

• The Agent is assigned to the Principal by law/custom/birth

• The P-A contract is implicit, since legal minors cannot sign or negotiate contracts

– Contract is not between child and parent, but parent and state

– Parents have an “implicit promise” to behave in the interests of the child(Becker and Murphy, 1988; Munro, 2001)

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Background (continued)

• Information asymmetry in health care – Parent/Provider: Parents seek help from physician agents to help

determine a course of treatment

– Parent/Child: Children must communicate symptoms to parents

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Cost-Sharing

• Adults and children in the same employer-based health plan typically face the same levels of cost-sharing (e.g., copayments, coinsurance)

• Most cost-sharing studies have focused on the price-responsiveness of adults.

– Few studies include children or report results separately for children.– Little evidence regarding price-responsiveness and chronic illness in children

• Price elasticity for medical services is different for children and adults (Newhouse 1981)

– Children: price inelastic response for inpatient services, price elastic response for outpatient services

– Adults: price elastic response for both inpatient and outpatient services

• Price elastic demand for antibiotics among children and adults (Foxman 1987)

• Adoption of a 3-tier formulary from a 1-tier formulary medications in children resulted in a decline in the rate of adoption of ADHD medications but few changes in utilization for existing users (Huskamp 2005)

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Study Aims

• To examine the effects of higher levels of prescription drug cost-sharing on children with chronic illness

– Analyze price-responsiveness for a single, common chronic illness, persistent asthma, affecting both children and adults

– Is price important when providing health care to children with a common chronic illness?

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Data Source

• 2001 through 2003 MarketScan Commercial Claims and Encounters database

– Representing the health care experience of enrollees in employer-sponsored health plans in the US

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Study Sample

• Patients with Persistent Asthma age 5-54 years

• Met HEDIS denominator criteria for persistent asthma (493.xx) in index year (2001 or 2002)

– Based on: inpatient use, ED use, outpatient use and/or asthma prescription drug use

• Continuously enrolled at least 24 months

• Index year/measurement year combinations (2001/2002 or 2002/2003

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Study Sample

29%

71%

Children Adults

56,381 adults

(18-54 years)

22,985 children

(5-17 years)

- Children and adults were enrolled in the same set of employer-based health plans

-22.9% of children and 27.5% of adults appear in both years

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Measures

1. Any asthma drug use (1=yes, 0=no)– At least one prescription in the measurement year (2002 or 2003) if

identified as having asthma in prior year

2. Count of asthma prescriptions (in 30-day equivalents) in 2002 or 2003

3. Count of prescriptions conditional on use (in 30-day equivalents) in 2002 or 2003

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Explanatory Variables

• Patient Cost-Sharing– Asthma drug cost sharing amount (US$ 2003 per 30-day supply) – Office Visit cost sharing amount (US$ 2003 per visit)

• Sociodemographic - Age, Female, US Census Region, Median Household Income (by ZIP code via Census information), salaried/hourly

• Health Plan Type – (e.g., HMO, PPO, POS, Comprehensive)

• Pulmonologist visit (prior 12 months)

• Disease Prevalence/Comorbidity (prior 12 months)– Charleson Comorbidity Index– Stage of Asthma (Disease Staging)– Sinus infection, otitis media, migrane, bronchitis– Anxiety, SSRI use, Depression

• Time (index year 2001)

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Multivariate Analysis

• P(Any useit|xit) = F(0 + 1sociodemographicit + 2planit + 3providerip + 4severityip + 5comorbidityip + 6 cost-sharingit)

– Panel data logit model for any asthma drug use

• P(Number of Rxit|xit) = G(0 + 1sociodemographicit + 2planit + 3providerit + 4severityip + 5comorbidityip + 6 cost-sharingit)

– Panel data poisson model for counts of prescription drugs

• where i is patient, t is measurement year, p is index year

• panel data

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Results: Selected CharacteristicsChildren Adults

Characteristic n= 22,985 n= 56,381

Age (y) 10.7 3.7 46.3 9.4

Charlson Index 0.52 0.54 0.68 0.97

Copayment

Asthma Copayment ($/30 day supply) $9.6 4.3 $9.4 4.7

Measures

Any asthma drug 76.6% 78.0%

Count of asthma drugs 4.0 4.6 4.9 5.5

Count of asthma prescriptions

conditional on use

5.4 4.6 6.6 5.4

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Results – Any Asthma Drug

0.6

0.65

0.7

0.75

0.8

Adults Children

Pre

dic

ted

Pro

ba

bili

ty o

f A

ny

Us

e

Mean Copay $10 increase

Selected Effects

Adults

n=56,381

Children

n=22,958

Copayment -0.019***

(0.004)

0.001

(0.006)

Age 0.024***

(0.002)

-0.088***

(0.006)

Pulmonologist Visit (last 12 months)

0.397***

(0.054)

0.544***

(0.172)

Household Income

0.008***

(0.001)

0.008***

(0.001)

Effects of a $10 increase in Copayment

***

*** p<.01

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Results – Number of Asthma Prescriptions

0.8

1.3

1.8

2.3

2.8

3.3

3.8

4.3

4.8

5.3

Adults Children

Nu

mb

er

of

As

thm

a P

res

cri

pti

on

s


Selected Effects

Adults

n=56,381

Children

n=22,958

Copayment -0.008***

(0.001)

0.002

(0.002)

Age 0.011***

(0.001)

-0.040***

(0.002)


0.08***

(0.011)

0.136***

(0.040)

Household Income

0.001***

(0.000)

0.002***

(0.001)


***

*** p<.01

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Results – Number of Prescriptions, Conditional on Use

0.8

1.8

2.8

3.8

4.8

5.8

6.8

Adults Children

Nu

mb

er

of

As

thm

a P

res

cri

pti

on

s


Selected Effects

Adults

n=42,763

Children

n=22,958

Copayment -0.004***

(0.001)

0.002

(0.001)

Age 0.007***

(0.000)

-0.002***

(0.002)


0.086***

(0.010)

0.114***

(0.035)

Household Income

-.0001

(0.000)

0.001*

(0.001)


***

*** p<.01, * p<.05

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Other Results

• Family Dyads– Adults (parents) with asthma who had children with asthma (n=2,644)

had were less price sensitive than adults without asthmatic children for each of the three measures: any use, number of prescriptions contingent on use, number of prescriptions

• Adults and children with asthma in both years– Patients appearing in both years (adults, n=21,423 ; children n=7,187)

had a less elastic price response than the full sample

• Income– Price effects did not vary by income.

• Children residing in lower income areas (< $38K) had the same inelastic response as children residing in higher income areas

(> $64K)

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Limitations

• Measure prescription fills, not actual consumption patterns

• Persistent asthma criteria – Meeting the asthma criteria for 2 years may improve ability to select

patients most likely to have asthma-related utilization (Mosen 2005, Weiss 2006)

• Sensitivity analysis requiring 2 years of asthma revealed no difference in results

– Criteria based upon utilization, not pulmonary function

• Continuously-enrolled population with employer-sponsored insurance– Higher income

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Conclusions• Commercially-insured parents in employer-sponsored health plans

may err on the side of caution by providing medications to their chronically-ill children

• Higher copayments for children with asthma may not affect the utilization of prescription drugs, as parents may seek to act in the best interests of their children.

• Prescription drug copayments may not impede care for chronically-ill children but may create a financial burden for families

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Other Considerations

For child asthmatics, demand is inelastic.

Is Q’ optimal?

Demand for Asthma Prescriptions

Q* Q’

Price perPrescription

QuantityOf Prescriptions

Copay1

Copay2

D

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Other Considerations

• “Even altruistic parents have to consider the trade-off between their consumption and the human capital of children” (Becker and Murphy, 1988, p. 5)

• The loss in buying power may introduce principal-agent conflicts within the family

– Choices between medications and other goods

– Trade-off between the welfare of the child and the welfare of the parent– Particularly important for lower income families (Munro 2001)

• Are higher user fees (e.g, higher copayments) the most effective way to manage consumption of maintenance medications in chronically-ill children?

Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness

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