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Government pharmaceutical subsidy policy and the demand for health care in Russia: evidence from the Russia Longitudinal Monitoring Survey

Citation

Wickham, Cheryl Elin (2000). Government pharmaceutical subsidy policy and the demand for health care in Russia: evidence from the Russia Longitudinal Monitoring Survey. Master's thesis / Doctoral dissertation.

Abstract

Government pharmaceutical financing policies are typically implemented in the absence of information about how the level and placement of drug subsidies affect health care-seeking behavior and ultimately health system costs and the burden of morbidity and mortality. This dissertation uses household data from the 1996 round of the nationally representative Russia Longitudinal Monitoring Survey (RLMS) to analyze the relationship between outpatient drug prices and health care demand in the Russian Federation. There is a limited drug subsidy in place in Russia, but most patients pay out-of-pocket for all outpatient drugs. In this dissertation, drug prices are defined and estimated in a way that allows drugs to be represented as a homogenous commodity with a single price that can be estimated from cross-sectional data. First, a simple static utility maximization model is used to determine the short-term response of health care demand to drug prices. The instrumental variable technique is used to correct for measurement error in the estimated drug price. There is evidence that higher drug prices reduce both the probability of reporting an illness and the probability of seeking care once an illness is reported. The demand for health care among males without medical insurance responds most negatively to drug prices. Next, a Grossman-type human capital model of demand for health is specified to model the dynamic aspects of derived demand for health care. The results show that higher drug prices in the previous year slightly increase the probability of hospitalization in the current year. Thus, there is some evidence that higher drug prices lead to an immediate reduction in demand for medical treatment, which may lead to a further worsening of health status and an increase in the probability of hospitalization in the future.

Reference Type

Thesis

Year Published

2000

Author(s)

Wickham, Cheryl Elin