The Health Costs of Cost Sharing

Area of Science:

• Health Economics
• Public Health Policy
• Pharmacoeconomics

Background:

• Abrupt changes in prescription drug prices can lead to medication interruptions.
• Medicare's drug benefit policy creates quasi-random drug budgets for 65-year-olds, impacting out-of-pocket costs.

Purpose of the Study:

• To investigate the health consequences of sudden drug interruptions due to price changes.
• To assess the efficiency of cost-sharing policies in prescription drug benefits.

Main Methods:

• Utilized Medicare's birth month-based drug budget assignment as an "as-if-random" policy.
• Employed machine learning to identify patients at high risk for adverse events.
• Conducted a survey to gauge patient awareness of medication risks.

Main Results:

• A $100 decrease in monthly drug budget correlates with a 0.0164 percentage point increase in monthly mortality.
• High-risk patients disproportionately reduced use of high-value, essential medications.
• Only one-third of surveyed individuals recognized serious risks from short-term drug cessation.

Conclusions:

• Prescription drug cost-sharing is inefficient and leads to adverse health outcomes.
• The current policy results in missed opportunities for cost-effective health gains.
• Patient education on medication risks is crucial for effective healthcare policy.