Three essays on drug insurance and the well-being of children and their families

Abstract

In Canada, prescription drugs and dental care have traditionally been excluded from the universally covered health services. In the absence of universal drug (and dental) insurance, low-income children have faced a higher risk of not receiving necessary treatment and their families faced the risk of high medical spending. This thesis studies the effects of free drug and dental insurance for children on different facets of family well-being. In Chapter 2, I study the effects of Quebec universal drug insurance reform on household spending. I estimate a small reduction in household drug spending among middle-income families but no effect for low-income families. Instead, I find larger offsetting increases in spending on health premiums for all income groups. This finding is alarming since it suggests an increasing financial burden from a drug insurance program instead of a benefit. In Chapter 3, I study the impact of free coverage of prescription drugs and dental services for children in low-income families introduced in Saskatchewan in 1998. I find that total drug and dental out-of-pocket spending of households declined on average by 30% or more. In addition, I find that the reduction in the top part of the drug spending distribution was much larger, likely owing to parents becoming covered for drug costs. These findings suggest that dental insurance for children is as important as drug insurance at reducing the risk of out-of-pocket spending and that the risk of very high costs is truly reduced when both children’s and parents’ costs are covered. Finally, in Chapter 4, I study the effect of free drug coverage for children on medication utilization and health outcomes. I find heterogeneous effects on medication use, with larger increases in the use of more controversial medications such as Ritalin. Focusing on improved access to asthma medications, I find improvements in child health outcomes and parental depression among lower-income families. These findings suggest that providing free drug insurance to children in low-income families improves the well-being of both the child and the parents, and the design of public drug programs for children should take into account these broader benefits.