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Member Research & Reports

Member Research & Reports

UAB Researches the Effects of Increased CHIP Payments on Expenditures

Dr. Bisakha Sen, professor in the department of health care organization and policy at the University of Alabama at Birmingham, recently explored whether prescription drugs as well as non-pharmaceutical expenditures by enrollees changed in Alabama’s Children’s Health Insurance Program (CHIP), ALL Kids, following copayment increases in fiscal year 2004. Co-investigators were department colleagues Dr. Justin Blackburn, assistant professor; Dr. Michael Morrisey, professor; Dr. David J. Becker, associate professor; Dr. Meredith Kilgore, professor and chair; and Dr. Nir Menachemi, professor; along with Ms. Cathy Caldwell, director of the Bureau of Children’s Health Insurance in the Alabama Department of Public Health.


[Photo: Dr. Bisakha Sen]

The researchers used data—from between 1999 and 2007, obtained from claims files and the state’s administrative database—on ALL Kids enrollees participating between one to three years both before and after the changes to the copayment schedule, as well as estimate regression models with individual-level fixed effects to control for time-invariant heterogeneity at the child level for an accurate estimate of how program expenditures change for the same individual following co-payment changes. Primary outcomes of interest were expenditures for prescription drugs by class and brand-name and generic versions

Study findings indicated that, following the copayment increase, the probability of any expenditure declined by 5.8 percent, brand name drugs by 6.9 percent, and generic drugs by 7.4 percent. In addition, conditional on any use, program expenditures for all drugs declined by 7.9 percent, for brand name drugs by 9.6 percent, and for generic drugs by 6.2 percent. The largest declines were for antihistamine drugs; the least declines were for central nervous system agents. Declines were smaller and statistically weaker for children with chronic health conditions. Concurrent declines were also seen for non-pharmaceutical medical expenditures.

The team concluded that copayment increases appear to reduce program expenditures on prescription drugs per enrollee and may be a useful tool for controlling program costs.

“Can Increases in CHIP Copayments Reduce Program Expenditures on Prescription Drugs?” was published in May in the Medicare & Medicaid Research Review.

Journal article: