Average Annual Spending Research Articles

Black Households Are More Burdened by Vehicle Ownership than White Households

Vehicle ownership is a significant cost to households, but Black households are more likely to be burdened than White households. Previous assessments of transportation spending between races did not differentiate by vehicle ownership status, depressing overall transportation spending by Black households, which are three times as likely as White households not to have access to a car and, thus, spend comparatively little on transportation. When these experiences are isolated, 76% of Black households with vehicles are burdened by transportation spending compared with 60% of White households. Black households with vehicles allocate more of their total average annual spending to transportation regardless of income, and disparities in transportation burden are present even in high-earning households. Black households that are in poverty spend on average $1,115 more per car than their White peers. Insurance, gasoline, vehicle loans, and leasing are all major drivers of transportation burden on Black households and, frequently, these are less burdensome to White households. This adds to concerns of disparate safety and environmental impacts of automobility experienced by Black households, for example, higher rates of pedestrian fatalities and risk of childhood asthma from vehicle exhaust fumes.

Prescription drug spending by payer: Implications for managed care

BackgroundBrand-name prescription drugs are an important driver of prescription drug spending, but different payers may bear these costs differentially necessitating different policy goals for each payer. But little is known about how the top 10 selling drugs in the U.S. impact spending across payers. ObjectiveTo estimate the differential spending burden of top prescription drugs on Medicaid, Medicare, commercial coverage, and out-of-pocket (OOP) spending. MethodsThe percentage of total prescription drug spending, total spending, total prescriptions, and average cost per prescription overall and for each of the following payers – Medicaid, Medicare, private insurance, and OOP – was calculated for each of the top 10 selling prescription drugs using 2017–2019 Medical Expenditure Panel Survey data. ResultsThese 10 prescription drugs accounted for average annual spending of $83.4 billion and 19.0% of all prescription drug spending. Medicare tended to contribute the highest fraction of spending. The average annual cost per prescription ranged from $500 for Advair to $7400 for Tecfidera. Significant variation in the average annual number of prescriptions filled was observed, ranging from 1.4 million for Tecfidera to 13.6 million for Lantus. ConclusionsThe findings highlight the significant impact of the top 10 selling prescription drugs on U.S. prescription drug spending. The wide variation in per prescription cost as well as contribution to each payer's prescription drug burden emphasizes how policies targeting top-selling drugs may differentially impact payers as well as how payer-specific policies may differ substantially even for top selling drugs.

Incorporating Added Therapeutic Benefit and Domestic Reference Pricing Into Medicare Payment for Expensive Part B Drugs

ObjectivesIdentify expensive Part B drugs and evidence for each drug’s added benefit and model a reimbursement policy for Medicare that integrates added benefit assessment and domestic reference pricing. MethodsA retrospective analysis using a 20% nationally representative sample of 2015 to 2019 traditional Medicare Part B claims. Expensive drugs were defined as having average annual spending per beneficiary exceeding the average annual social security benefit ($17 532 in 2019). For expensive drugs identified in 2019, added benefit assessments conducted by the French Haute Autorité de Santé were collected. For expensive drugs with a low added benefit rating, comparator drugs were identified in French Haute Autorité de Santé reports. For each comparator, average annual spending per beneficiary in Part B was computed. Potential savings from 2 reference pricing scenarios were calculated: reimbursing expensive Part B drugs with low added benefit at the level of each drug's (1) lowest cost comparator and (2) beneficiary-weighted-average cost of all comparators. ResultsThe number of expensive Part B drugs grew from 56 in 2015 to 92 in 2019. Of the 92 expensive drugs in 2019, 34 offer low added benefit. Implementing reference pricing for these expensive drugs with low added benefit could have saved an estimated $2.1 billion if prices were set based on spending for their lowest cost comparator, or $1 billion if prices were set based on the weighted average of spending for comparators. ConclusionReference pricing based on added benefit assessment could be used to address the launch prices for expensive Part B drugs with low added benefit.

Trends in Medicare Payments for Beneficiaries With Aortic Stenosis.

Background Aortic stenosis (AS) is the most common form of valvular heart disease with an increasing prevalence. Management of AS has changed dramatically with the introduction of transcatheter aortic valve replacement (AVR). The shift in management of AS, combined with an aging population, may increase the cost of patients with AS in the US health care system. Methods and Results We performed a retrospective cohort study, using inpatient, carrier, and outpatient data from a 20% Medicare fee-for-service beneficiaries' sample from 2008 to 2019 and included beneficiaries, aged ≥65 years. We identified beneficiaries with a diagnosis of AS and stratified the sample into 3 age groups: 66 to 74, 75 to 84, and ≥85 years. We evaluated the crude and adjusted changes in annual Medicare payments (total and component) per beneficiary. We identified 1 887 340 (1.6%) Medicare beneficiaries diagnosed with AS. The average annual spending for Medicare beneficiaries with AS was $19 241 in 2010 and increased annually by $301 to $23 174 in 2019 (P<0.0001). Annual Medicare payments on patients with AS increased from $2 894 995 131 in 2010 to $4 619 077 182 in 2019, a difference of >1.7billion dollars. Inpatient spending increased 1.1% per year, with the highest increase in patients aged ≥85 years (1.9%). The percentage of beneficiaries undergoing surgical AVR decreased from 3.7% to 1.6%, and annual spending on surgical AVR decreased an average of 7.2% per year. The percentage of beneficiaries undergoing transcatheter AVR increased from 0% in 2010 to 3.8% in 2019, and annual spending for transcatheter AVR increased by 458.7% per year. Conclusions Although average annual Medicare spending per beneficiary modestly increased over the study period, the increase in the prevalence of AS and the proportion of beneficiaries undergoing (transcatheter) interventions for AS led to a substantial increase in overall Medicare spending among patients with AS.

The Advancing American Kidney Health (AAKH) Executive Order: Promise and Caveats for Expanding Access to Kidney Transplantation.

More than 700,000 persons in the United States suffer with kidney failure but the vast majority will not have an opportunity to receive a kidney transplant, even though transplantation provides superior quality of life and survival compared with chronic dialysis. In 2019, there were 16,534 deceased donor and 6867 living donor kidney transplants, whereas nearly 95,000 patients remain on the kidney transplant waiting list. Remarkably, two important transplant strategies, compatible living donor kidney transplantation (LDKT) and transplantation with high-quality deceased donor organs, not only provide clinical benefit but are also cost saving to the health care system (1). Higher-risk kidney transplant options ( i.e ., with lower-quality deceased donor organs or blood type-incompatible LDKT) are more expensive but remain cost-effective, providing superior cost per quality-adjusted life year ratios than dialysis (1). Although a minority of patients with kidney failure have comorbidities that preclude safe transplantation, many others that are not currently wait-listed would likely pursue and benefit from transplantation if it were more accessible, without the prolonged waiting that often correlates with health deterioration on dialysis and may render a patient “too sick for transplant.” The federal government is deeply invested in the care of patients with kidney disease, and the establishment of disease-specific Medicare entitlement in 1972 expanded dialysis access across age groups and comorbidity profiles to an extent not possible in some other countries. In concert, Medicare spending for kidney failure care has grown exponentially, to approximately $91,000 annually for the care of each hemodialysis patient and $76,000 for the care of each peritoneal dialysis patient, resulting in total spending of $36 billion in 2016 (2). By comparison, average annual spending for transplant recipients is approximately $38,000 (2). Moreover, current overall adjusted mortality per 1000 patient-years rates is 166 for hemodialysis patients and 154 for peritoneal dialysis patients, compared …

Public spending in federal protected areas in Brazil

Establishing protected areas (PAs) is one of the most common land use policies implemented by governments to maintain healthy ecosystems at different spatial scales and in distinct socioeconomic settings. However, reliable knowledge on government spending in PAs and the factors that influence this spending is limited. In this study, we describe the public spending by the Brazilian government in a set of 289 federal PAs that altogether cover an area of 743,406 km2. Then, we assess how six contextual factors (area, age, population density, human development index [HDI], ecological regions, and management group) influence this spending. From 2013–2016, the Brazilian government invested at least US$197.8 million in 289 PAs. The average annual spending per km2 presents a wide variation, ranging from US$0.3/km2 to US$392,250/km2. A linear regression model indicates that (1) the annual public spending increases with PA size, PA age, human population density, and HDI; (2) multiple-use PAs receive fewer resources than strict-protection PAs do; and (3) no difference exists in the public spending in PAs between Amazon—the region perceived by the national population as the most important for Brazil’s natural resources—and other ecological regions in the country. Our study highlights the urgent need to document the flows of financial resources to PAs, with the aim of understanding their variation patterns and the processes that cause such a variation. Similar studies in other countries are required to evaluate if the patterns that we describe here are general or are country specific. Besides, separately assessing the investments coming from governments and the financial resources provided by other conservation investors (i.e., NGOs, multilateral, corporations) is worthwhile to produce a more comprehensive and nuanced view of financial flows to PAs.

National Health Expenditure Projections, 2018-27: Economic And Demographic Trends Drive Spending And Enrollment Growth.

National health expenditures are projected to grow at an average annual rate of 5.5percent for 2018-27 and represent 19.4percent of gross domestic product in 2027. Following a ten-year period largely influenced by the Great Recession and major health reform, national health spending growth during 2018-27 is expected to be driven primarily by long-observed demographic and economic factors fundamental to the health sector. Prices for health care goods and services are projected to grow 2.5percent per year, on average, for 2018-27-faster than the average price growth experienced over the last decade-and to account for nearly half of projected personal health care spending growth. Among the major payers, average annual spending growth in Medicare (7.4percent) is expected to exceed that in Medicaid (5.5percent) and private health insurance (4.8percent) over the projection period, mostly as a result of comparatively higher projected enrollment growth. The insured share of the population is expected to remain stable at around 90percent throughout the period, as net gains in health coverage from all sources are projected to keep pace with population growth.

The Challenge of Measuring Surgeon Spending for Payment Policies.

Our objective was to understand the reliability of profiling surgeons on average health care spending. Under its Merit-based Incentive Payment System (MIPS), Medicare will measure surgeon spending and tie performance to payments. Although the intent of this cost-profiling is to reward low-cost surgeons, it is unknown whether surgeons can be accurately distinguished from their peers. We used Michigan Medicare and commercial payer claims data to construct episodes of surgical care and to calculate average annual spending for individual surgeons. We then estimated the "reliability" (ie, the ability to distinguish surgeons from their peers) of these cost-profiles and the case-volume that surgeons would need in order to achieve high reliability [intraclass correlation coefficient (ICC) >0.8]. Finally, we calculated the reliability of 2 alternative methods of profiling surgeons (ie, using multiple years of data and grouping surgeons by hospitals). We found that annual cost-profiles of individual surgeons had poor reliability; the ICC ranged from <0.001 for CABG to 0.061 for cholecystectomy. We found that few surgeons in the state of Michigan have sufficient case-volume to be reliably compared; 1% had the minimum yearly case. Finally, we found that the reliability of the cost-profiles can be improved by measuring spending at the hospital-level and/or by incorporating additional years of data. These findings suggest that the Medicare program should measure surgeon spending at a group level or incorporate multiple years of data to reduce misclassification of surgeon performance in the MIPS program.

Estimating the Direct Costs of Outpatient Opioid Prescriptions: A Retrospective Analysis of Data from the Rhode Island Prescription Drug Monitoring Program.

Overuse and misuse of prescription opioids is associated with increased morbidity and mortality and places a significant cost burden on health systems. To estimate annual statewide spending for prescription opioids in Rhode Island. A cross-sectional study of opioids dispensed from retail pharmacies using data from the Rhode Island Prescription Drug Monitoring Program (PDMP) was performed. The study sample consisted of 651,227 opioid prescriptions dispensed to 197,062 patients between January 1, 2015, and December 31, 2015. The mean, median, and total cost of opioid use was estimated using prescription dispensings and patients as units of analysis. A generalized linear model with gamma distribution with an identity link function, and separately with a log link function, was used to estimate the absolute and relative differences in per-patient annual adjusted average opioid prescription cost, respectively, by potential predictors. The estimated 2015 annual expenditure for opioid prescriptions in Rhode Island was $44,271,827. The average and median costs of an opioid prescription were $67.98 (SD $210.91) and $21.08 (quartile 1 to quartile 3 = $7.65-$47.51), respectively. Prescriptions for branded opioid products accounted for $17,380,279.05, which was approximately 39.3% of overall spending, although only 6% of all opioids dispensed were for branded drugs. On average, patients aged 45-54 years and 55-64 years had overall adjusted spending for opioids that were 1.53 (95% CI = 1.49-1.57) and 1.75 (95% CI = 1.71-1.80) times higher than patients aged 65 years and older, respectively. Per patient Medicaid and Medicare average annual spending for opioid prescriptions were 1.19 (95% CI = 1.16-1.22) and 2.01 (95% CI = 1.96-2.06) times higher than commercial insurance spending, respectively. Annual opioid prescription spending was 2.01 (95% CI = 1.98-2.04) and 1.50 (95% CI = 1.45-1.55) times higher among patients who also had at least 1 dispensing of a benzodiazepine or sympathomimetic stimulant, respectively. Average total spending for prescription opioids per patient increased with the average daily dosage: from 3-fold for patients using 50-90 morphine milligrams equivalent (MME) daily to 22-fold for those receiving 90 or more MME daily compared with those receiving less than 50 MME daily. This study provides the first estimate of the statewide direct cost burden of prescription opioid use using PDMP data and standardized pricing benchmarks. Total annual cost increased with age up to 65 years, mean daily dose, and concurrent use of benzodiazepines or stimulants. Commercial insurance bore the majority of the cost of prescription opioid use, but cost per patient was highest among Medicare beneficiaries. In addition to reducing harms associated with opioid overuse and misuse, substantial cost savings could be realized by reducing unnecessary opioid use, especially among middle-aged adults. This study was funded by the Rhode Island Department of Health. Aroke and Kogut report grants from the Rhode Island Department of Health during this study. Kogut is partially supported by Institutional Development Award Number U54GM115677 from the National Institute of General Medical Sciences of the National Institutes of Health, which funds Advance Clinical and Translational Research (Advance-CTR). Koziol reports grants from the Centers for Disease Control and Prevention during this study. The other authors have nothing to disclose. The content of this study is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health. Study concept and design were contributed by Koziol, Ragosta, and Kogut, along with Aroke. Koziol, Ragosta, Aroke, and Kogut collected the data, and data interpretation was performed by Aroke, Buchanan, Wen, and Kogut. The manuscript was primarily written by Aroke, along with Buchanan and Kogut, and revised by Aroke, Buchanan, Wen, and Kogut.

Income Disparities in the Prevalence, Severity, and Costs of Co-occurring Chronic and Behavioral Health Conditions.

Behavioral health problems usually co-occur along with physical health problems, resulting in higher health care costs. These co-occurring conditions are likely to be more prevalent and serious among low income patients, affecting both the quality and costs of care. To examine the prevalence, severity, and health care costs of co-occurring chronic and behavioral health conditions among low income people compared with higher income people. Analysis of the 2011-2014 Medical Expenditure Panel Survey. Sample includes 146,000 persons aged 18-64 years. Regression analysis was used to examine how the combination of behavioral health conditions and chronic health conditions is associated with health care expenditures, and how this association differs by family income. (1) Comorbid behavioral health problems are more prevalent and serious among low income people with chronic conditions compared with higher income people; (2) among patients with co-occurring chronic and behavioral problems, average annual spending is greater among the low income patients ($9472) compared with high income patients ($7457); (3) higher costs among low income patients with co-occurring conditions reflects their poorer mental and physical health, relative to higher income patients. For many low income people, comorbid behavioral problems need to be understood in the social context in which they live. Simply screening low income people for behavioral health problems may not be sufficient unless there is greater understanding of the mechanisms that both cause and exacerbate chronic and behavioral health problems in the low income population.

Does Defensive Medicine Reduce Health Care Spending?

The medical community often argues that physician fear of legal liability increases health care spending. Theoretically, though, the effect could be positive or negative, and empirical evidence has supported both cases. Previous empirical work, however, has ignored the fact that physicians face risk from industry oversight groups like state-level medical licensing boards in addition to civil litigation risk. This paper addresses this omission by incorporating previously unused data on punishments by oversight groups against physicians, known as adverse actions, along with malpractice payments data to study state-level health care spending. My analysis suggests that health care spending does not rise in response to higher levels of risk. An increase in adverse actions equal to 16 (the mean, absolute value of year-to-year changes within a state) is found to be associated with statistically significant average annual spending decreases in hospital care and prescription drugs of as much as 0.25% (nearly $29 million) and 0.29% (almost $9.3 million). Malpractice payments were generally estimated to have smaller, statistically insignificant effects.

PrEP for key populations in combination HIV prevention in Nairobi: a mathematical modelling study

The HIV epidemic in the population of Nairobi as a whole is in decline, but a concentrated sub-epidemic persists in key populations. We aimed to identify an optimal portfolio of interventions to reduce HIV incidence for a given budget and to identify the circumstances in which pre-exposure prophylaxis (PrEP) could be used in Nairobi, Kenya. A mathematical model was developed to represent HIV transmission in specific key populations (female sex workers, male sex workers, and men who have sex with men [MSM]) and among the wider population of Nairobi. The scale-up of existing interventions (condom promotion, antiretroviral therapy, and male circumcision) for key populations and the wider population as have occurred in Nairobi is represented. The model includes a detailed representation of a PrEP intervention and is calibrated to prevalence and incidence estimates specific to key populations and the wider population. In the context of a declining epidemic overall but with a large sub-epidemic in MSM and male sex workers, an optimal prevention portfolio for Nairobi should focus on condom promotion for male sex workers and MSM in particular, followed by improved antiretroviral therapy retention, earlier antiretroviral therapy, and male circumcision as the budget allows. PrEP for male sex workers could enter an optimal portfolio at similar levels of spending to when earlier antiretroviral therapy is included; however, PrEP for MSM and female sex workers would be included only at much higher budgets. If PrEP for male sex workers cost as much as US$500, average annual spending on the interventions modelled would need to be less than $3·27 million for PrEP for male sex workers to be excluded from an optimal portfolio. Estimated costs per infection averted when providing PrEP to all female sex workers regardless of their risk of infection, and to high-risk female sex workers only, are $65 160 (95% credible interval [CrI] $43 520-$90 250) and $10 920 (95% CrI $4700-$51 560), respectively. PrEP could be a useful contribution to combination prevention, especially for under-served key populations in Nairobi. An ongoing demonstration project will provide important information regarding practical aspects of implementing PrEP for key populations in this setting. The Bill & Melinda Gates Foundation.

Comments on the Formulation of the National Broadband Research Agenda

This paper responds to a call by the National Telecommunications and Information Administration (NTIA) and the National Science Foundation (NSF) for public comment to inform the development of the National Broadband Research Agenda. We propose the development of a comprehensive national database on Internet access packages and pricing available to residential consumers. While some data exist on average annual spending on Internet access service nationwide, the level of detail is inadequate to use for research or to correlate with demographic factors that might affect Internet access. Aggregate annual pricing statistics also fail to detail any breakdown of costs, which may include monthly service charges, introductory pricing that changes over time, installation fees, activation fees, data overages, and equipment purchases. Moreover, high-level numbers do not allow researchers to evaluate the effects of competition in regional marketplaces. The formulation of a National Broadband Research Agenda presents an opportunity to create a robust database from which researchers, individuals and institutions could benefit.

Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D

I take advantage of regulatory and pricing dynamics in Medicare Part D to explore interactions among adverse selection, inertia, and regulation. I first document novel evidence of adverse selection and switching frictions within Part D using detailed administrative data. I then estimate a contract choice and pricing model that quantifies the importance of inertia for risk sorting. I find that in Part D switching costs help sustain an adversely-selected equilibrium. I also estimate that active decision making in the existing policy environment could lead to a substantial gain in annual consumer surplus of on average $400–$600 per capita—20 percent to 30 percent of average annual spending. (JEL D82, G22, H51, I13, I18)

Growth in Spending on and Use of Services for Mental and Substance Use Disorders After the Great Recession Among Individuals With Private Insurance.

Recessions are associated with increased prevalence of mental and substance use disorders, but their effect on use of behavioral health services is less clear. This study examined changes in spending per enrollee for behavioral health services compared with general medical services among individuals with private insurance following the Great Recession that began in 2007. The National Survey on Drug Use and Health was used to examine the prevalence of behavioral health conditions among persons with private insurance from 2004 to 2013. Truven Health MarketScan Commercial Claims and Encounters data (2004-2012) were used to calculate use of and spending on treatment of behavioral and general medical conditions before and after the recession among individuals with employer-sponsored private health insurance. There was a statistically significant increase in serious psychological distress and episodes of major depression between 2007 and 2010. Between 2004-2009 and 2009-2012, the growth in average annual spending per individual slowed for general medical care (from 6.6% to 3.7%) but accelerated for behavioral health care (from 4.8% to 6.6%). From 2009 to 2012, the percentage of individuals receiving inpatient treatment, outpatient treatment, and prescription drugs for behavioral conditions increased, whereas use of these services for general medical care decreased or remained flat. Out-of-pocket costs increased more slowly for behavioral conditions than for other medical conditions. The recession was associated with increased need for and use of behavioral health services among individuals with private insurance. The Mental Health Parity and Addiction Equity Act may have also played a role in facilitating increasing use of behavioral health services after 2008.

Opportunities for Improved Chagas Disease Vector Control Based on Knowledge, Attitudes and Practices of Communities in the Yucatan Peninsula, Mexico

BackgroundChagas disease is a vector-borne parasitic disease of major public health importance. Current prevention efforts are based on triatomine vector control to reduce transmission to humans. Success of vector control interventions depends on their acceptability and value to affected communities. We aimed to identify opportunities for and barriers to improved vector control strategies in the Yucatan peninsula, Mexico.Methodology/principal findingsWe employed a sequence of qualitative and quantitative research methods to investigate knowledge, attitudes and practices surrounding Chagas disease, triatomines and vector control in three rural communities. Our combined data show that community members are well aware of triatomines and are knowledgeable about their habits. However, most have a limited understanding of the transmission dynamics and clinical manifestations of Chagas disease. While triatomine control is not a priority for community members, they frequently use domestic insecticide products including insecticide spray, mosquito coils and plug-in repellents. Families spend about $32 US per year on these products. Alternative methods such as yard cleaning and window screens are perceived as desirable and potentially more effective. Screens are nonetheless described as unaffordable, in spite of a cost comparable to the average annual spending on insecticide products.Conclusion/SignificanceFurther education campaigns and possibly financing schemes may lead families to redirect their current vector control spending from insecticide products to window screens. Also, synergism with mosquito control efforts should be further explored to motivate community involvement and ensure sustainability of Chagas disease vector control.

Spending on genetic tests grows

Spending on genetic tests grows

Use And Costs Of Bariatric Surgery And Prescription Weight-Loss Medications

The extent of use of bariatric surgery and weight-loss medications is unknown. Using the Nationwide Inpatient Sample, we estimate that the number of bariatric surgeries grew 400 percent between 1998 and 2002; such surgeries were performed on 0.6 percent of the 11.5 million adults clinically eligible in 2002. Hospital costs for bariatric surgery grew sixfold to $948 million in 2002. The inpatient death rate declined 64 percent. Among employers that covered weight-loss drugs in 2002, less than 2.4 percent of adults clinically eligible for these drugs used them, with average annual spending of $304 per user.

Employer drug benefit plans and spending on prescription drugs.

With drug spending rising rapidly for working-aged adults, many employers and health insurance providers have changed benefits packages to encourage use of fewer or less expensive drugs. It is unknown how these initiatives affect drug costs. To examine how innovations in benefits packages, such as those that include multitier formularies and mandatory generic substitution, affect total cost to insurance providers for generic and brand drugs and out-of-pocket payments to beneficiaries. Retrospective study from 1997 to 1999 linking claims data of 420,786 primary beneficiaries aged 18 through 64 years who worked at large firms (n = 25) with health insurance benefits that included outpatient drugs. Overall drug costs; generic, single-source brand, and multisource brand costs; and drug expenditures by health insurance providers and out-of-pocket costs for beneficiaries. For a 1-tier plan with a 5 US dollars co-payment for all drugs, the average annual spending was 725 US dollars per member. Doubling co-payments to 10 US dollars for all drugs reduced the annual average drug cost from 725 US dollars to 563 US dollars per member (22.3%, P<.001). Doubling co-payments in a 2-tier plan from 5 US dollars for generics and $10 for brand drugs to 10 US dollars for generics and 20 US dollars for brand drugs reduced costs from 678 US dollars to 455 US dollars (32.9%, P<.001). Adding an additional co-payment of 30 US dollars for nonpreferred brand drugs to a 2-tier plan (10 US dollars generics; 20 US dollars brand) lowered overall drug spending by 4% (P<.001). Requiring mandatory generic substitution in a 2-tier plan reduced drug spending by 8% (P<.001). Doubling co-payments in a 2-tier plan increased the fraction beneficiaries' paid out-of-pocket from 17.6% to 25.6%. Adding an additional level of co-payment, increasing existing co-payments or coinsurance rates, and requiring mandatory generic substitution all reduced plan payments and overall drug spending among working-age enrollees with employer-provided drug coverage. The reduction in drug spending largely benefited health insurance plans because the percentage of drug expenses beneficiaries paid out-of-pocket rose significantly.