Health Insurance and the Growth in Pharmaceutical Expenditures *

  title={Health Insurance and the Growth in Pharmaceutical Expenditures *},
  author={Patricia M Danzon},
This paper examines the contribution of insurance coverage to the recent unprecedented growth in spending on pharmaceuticals. Trends in drug spending over time closely paralleled the growth in drug coverage. Most of the coverage growth reflects an increase in the number of people with coverage, 65 percent from 1987 to 1996, rather than increased depth of coverage. The direct moral hazard effect of this insurance growth accounts for between one-fourth and one-half of the increase in drug… CONTINUE READING

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