Journal Article

The impact of prescription drug co-payments for publicly insured families

November 8, 2019

The European Journal of Health Economics

Co-payments for prescription drugs are a common feature of many healthcare systems, although often with exemptions for vulnerable population groups. International evidence demonstrates that cost-sharing for medicines may delay necessary care, increase use of other forms of healthcare and result in poorer health outcomes. Existing studies concentrate on adults and older people, particularly in the US, with relatively less attention afforded to paediatric and European populations. In Ireland, prescription drug co-payments were introduced for the first time for medical cardholders (i.e. those with public health insurance) in October 2010, initially at a cost of €0.50 per item, rising to €1.50 in January 2013, and further increasing to €2.50 in December 2013. Using data from the Growing Up in Ireland longitudinal study of children, and a difference-in-difference research design, we estimate the impact of the introduction (and increase) of these co-payments on health, healthcare utilisation and household financial wellbeing. The introduction of modest co-payments on prescription items was not estimated to impinge on the health of children and parents from low-income families. For the younger Infant Cohort, difference-in-difference estimates indicated that the introduction (and increase) in co-payments was associated with a decrease in GP visits and hospital nights, and a decrease in the proportion of households reporting ‘difficulties with making ends meet’. In contrast, for the older cohort of children (the Child Cohort), co-payments were associated with an increase in GP visiting, and an increase in household deprivation. While the parallel trends assumption for difference-in-difference analysis appeared to be satisfied, further investigation revealed that there were other time-varying observable factors (such as exposure to the economic recession over the period) that affected the treatment and control groups, as well as the two cohorts of children differentially, that may partly explain these divergent results. For example, while the analysis suggests that the introduction of the €0.50 co-payment in 2010 was associated with an increase in the probability of treated families in the Child Cohort being deprived by 9.4 percentage points, the proportion of treated families experiencing unemployment and reductions in household income also increased significantly around the time of the co-payment introduction. This highlights the difficulty in identifying the effect of the co-payment policy in an environment in which assignment to the treatment (i.e. medical cardholder status) was not randomly assigned.