Benefit Cap Research Articles

Shrinking the welfare state: the structure, geography and impact of British government benefit cuts

Welfare spending is currently a key element of government expenditure in western countries and it has grown considerably since the Second World War. But there have been calls for cuts in spending that have intensified since the onset of the financial crisis and the stress on austerity. This has been associated with a shift in the nature of welfare policy to what has been termed ‘workfare’, where benefits are increasingly means tested, time limited or financially capped and contingent on recipients seeking work. This shift has been seen in Britain since 1997 but has intensified since the election of the coalition government, who have instigated the most radical reshaping of welfare policy since 1945. The paper argues that geographers should pay more attention to the geography of welfare spending. The paper examines the structure of welfare spending in Britain and its geography, the nature and rationale for the welfare reforms and cuts, especially the stress on ‘fairness’, and the social and geographical impact of the benefit cap. It argues that the cuts point to a re‐orientation of the welfare state and pose political problems for the Opposition, given the shift in social attitudes to welfare.

Notes Procedural Fencing in Retiree Benefits Disputes: Applications of the First-Filed Rule in Federal Courts

Basil Chapman retired from ACF Industries, a railroad-car maker, after thirty-eight years of service. In December 2003, he received an unexpected phone call at his West Virginia home from a union representative, who informed him that an ACF executive wanted to speak with him. When they spoke, the executive informed Mr. Chapman that ACF was planning on changing its retirees’ health coverage plan. The ACF plan would now have a lifetime maximum benefit cap on hospital and surgical expenses for each participant and would require retirees to make monthly contributions. According to court papers filed later, Mr. Chapman responded, “We have a contract. You can’t do that.” Then, he said that he would “file in federal court” against ACF. The next business day, ACF filed a declaratory judgment action in the United States District Court for the Eastern District of Missouri asking the court to rule that retiree benefits were not vested and that ACF accordingly could alter benefits unilaterally. On January 26, 2004, Mr. Chapman, other named plaintiffs, and their union sued ACF in the United States District Court for the Southern District of West Virginia.

Prescription drug cost sharing: associations with medication and medical utilization and spending and health.

Prescription drugs are instrumental to managing and preventing chronic disease. Recent changes in US prescription drug cost sharing could affect access to them. To synthesize published evidence on the associations among cost-sharing features of prescription drug benefits and use of prescription drugs, use of nonpharmaceutical services, and health outcomes. We searched PubMed for studies published in English between 1985 and 2006. Among 923 articles found in the search, we identified 132 articles examining the associations between prescription drug plan cost-containment measures, including co-payments, tiering, or coinsurance (n = 65), pharmacy benefit caps or monthly prescription limits (n = 11), formulary restrictions (n = 41), and reference pricing (n = 16), and salient outcomes, including pharmacy utilization and spending, medical care utilization and spending, and health outcomes. Increased cost sharing is associated with lower rates of drug treatment, worse adherence among existing users, and more frequent discontinuation of therapy. For each 10% increase in cost sharing, prescription drug spending decreases by 2% to 6%, depending on class of drug and condition of the patient. The reduction in use associated with a benefit cap, which limits either the coverage amount or the number of covered prescriptions, is consistent with other cost-sharing features. For some chronic conditions, higher cost sharing is associated with increased use of medical services, at least for patients with congestive heart failure, lipid disorders, diabetes, and schizophrenia. While low-income groups may be more sensitive to increased cost sharing, there is little evidence to support this contention. Pharmacy benefit design represents an important public health tool for improving patient treatment and adherence. While increased cost sharing is highly correlated with reductions in pharmacy use, the long-term consequences of benefit changes on health are still uncertain.

Surgical Mortality, Hospital Quality, and Small Sample Size

In Reply: We strongly endorse the use of direct generic substitution and “rational prescribing” when they are based on rigorous scientific information, because these are important ways to help people manage their drug expenditures. This is based on our own finding that seniors who exceeded their drug benefit caps decreased their use of essential medications, as well as on estimates from others that 1 in 4 Medicare beneficiaries will face the “donut hole” in the new Medicare drug benefit. This “donut hole” represents the gap in coverage when beneficiaries’ annual drug expenditures exceed their benefit cap but are not yet high enough to qualify for catastrophic coverage. Better mechanisms to help people manage their drug costs must be found. We thank Drs Bjarnason and Kampmann for highlighting these programs in Denmark. Currently, all 50 states in the United States allow pharmacists to make direct generic substitutions unless directly prohibited by clinicians on the prescription. We support the additional development of evidence-based guidelines that take into account cost as well as safety and effectiveness to help clinicians and patients choose medications. However, transparency to both the patient and the clinician regarding potential cost-effectiveness trade-offs is essential. In the United States, health plans, insurers, and pharmacy benefit managers often send information to clinicians and patients to increase their awareness of drug costs and effectiveness. Other sources such as the treatment guidelines from The Medical Letter on Drugs and Therapeutics and from the State of Oregon have also added cost information to independent comparisons of drug effectiveness and safety. Further work is needed to ensure consistency among these guides and to help patients and clinicians use these tools in daily practice so that a patient’s health is optimized at the price that he or she is willing to pay.

Utilization of essential medications by vulnerable older people after a drug benefit cap: importance of mental disorders, chronic pain, and practice setting.

To identify specific characteristics of patients, physicians, and treatment settings associated with decreased receipt of essential medications in a chronically ill, older population following a Medicaid three-prescription monthly reimbursement limit (cap). Quasi-experiment with bivariate and multivariate regression. Patients in the New Hampshire Medicaid program and their regular prescribing physicians. Three hundred and forty-three chronically ill Medicaid enrollees with regular use of essential medications for heart disease, asthma/chronic obstructive pulmonary disease, diabetes mellitus, seizure, or coagulation disorders who received an average of three or more prescriptions per month during the baseline year. Postcap patient-level change in standard monthly dose of essential medications compared with the baseline period, presence of 11 comorbidities (defined by regular use of specific indicator drugs), practice setting, and location of regular prescribing physician. The mean percentage change in standard doses of essential medications following the cap was -34.4%. Larger changes were significantly associated with several baseline measures: greater numbers of precap medications, greater numbers of comorbidities, longer hospitalizations, and greater use of ambulatory services. The three comorbidities associated with the largest relative reduction in essential drug use were psychoses/bipolar disorders, anxiety/sleep problems, and chronic pain. Patients of physicians in group practices, clinics, or hospitals tended to have smaller dose reductions than those whose physicians were in solo or small-group practice. Patients most at risk of reduced access to essential medications because of a reimbursement cap include those with multiple chronic illnesses requiring drug therapy, especially illnesses with a mental health component. Physicians in clinics or large group practices may have maintained patient medication regimens more effectively.