Expenditures on medications constitute a large and growing component of health care expenditures, for both households and health plans. This study provides the first comprehensive look at this issue in Israel. It addresses questions such as: What have been the recent trends in household expenditure on medications? Was there a relationship between these expenditures and household characteristics, particularly income and age? What have been the health plans’ expenditures on and revenues from medications in recent years? What are the current co-payment arrangements, ceilings, and discounts, and how have they changed in recent years?
This study combines, for the first time, information on pharmaceutical expenditures from a number of different data sources, which reinforced and validated one another: the Central Bureau of Statistics’ Household Expenditure Surveys for 1987-1999; health plan financial reports for 1998-2000; data from Maccabi Healthcare Services and Leumit Health Services; and interviews with representatives of all four health plans.
The following are selected findings:
Medications constitute a substantial and rapidly increasing component of consumer spending.In 1999, the average household expenditure on medications was NIS 80 per month, and constituted 21% of total household expenditure on health (exclusive of the health tax). Between 1987 and 1999, there was a 118% real increase in this expenditure, compared with a 61% increase in the general expenditure on health.
Expenditures on medications impose a substantial burden on many low-income and elderly families. The poor do spend less than others on medications. Nevertheless, the burden was greater on them than on higher-income households: One in every six households (17%) in the bottom decile spent more than 5% of their income on medications – twice as much as that in the total population. The data also indicated a strong positive correlation between household expenditure on medications and age. A review of the current co-payment arrangement for vulnerable populations, including ceilings, exemptions, and discounts, revealed barriers that may prevent these populations from receiving the care they need.
It may be important to start using data on the link between medication use and age when calculating the capitation formula for distributing NHI monies among the health plans. The health plans’ per capita expenditure on medications increases with age more rapidly than do total per capita expenditures.
Analysis of the data revealed that Clalit had an advantage over the other health plans in expenditure on medications. In 2000, its expenditure per standardized capita was NIS 539, compared to Meuhedet’s NIS 624, Leumit’s NIS 642 and Maccabi’s NIS 732. Clalit also had a relative advantage in income from medications. These data included both revenue from co-payments, and revenue from payments for medications not included in the basic benefits package. Clalit’s income per standardized capita was NIS 235, compared to Maccabi’s NIS 223, Meuhedet’s NIS 195, and Leumit’s NIS 159.
The rate at which health plan members were financing health plan expenditure on medications was very high, equaling about 40% overall. This ranged from 44% in Clalit, to 30% in Maccabi and Meuhedet, and 25% in Leumit.
This report offered a valuable opportunity to present policymakers and senior health officials with a broad picture of household and health plan expenditure on medications, and raised a number of policy issues that deserve attention. Findings from the study are already being utilized in calculations that may lead to modification of the capitation formula.
This study was funded in part by the National Institute for Health Services and Health Policy Research.