Copayment
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The copayment or copay is a payment defined in the insurance policy and paid by the insured person each time a medical service is accessed. It is technically a form of coinsurance, but is defined differently in health insurance where a coinsurance is a percentage payment after the deductible up to a certain limit. It must be paid before any policy benefit is payable by an insurance company. Copayments do not usually contribute towards any policy out-of-pocket maximums whereas coinsurance payments do.[1]
Insurance companies use copayments to share health care costs to prevent moral hazard. Though the copay is often only a small portion of the actual cost of the medical service, it is thought to prevent people from seeking medical care that may not be necessary (eg: an infection by the common cold), which can result in substantial savings for insurance companies. The underlying philosophy is that with no copay, the perception is that medical care is "free" and then is used more often. However, a copay may also discourage people from seeking necessary medical care.
Some, at least, insurance companies set the copay percentage for non-generic drugs higher than for generic drugs. Occasionally if a non-generic drug is reduced in price insurers will agree to classify it as generic for copayment purposes (as occurred with simvastatin).
[edit] Observed effects
Medication copayments have also been associated with reduced use of necessary and appropriate medications for chronic conditions such as chronic heart failure[2], chronic obstructive pulmonary disease, and asthma[3]. In a 2007 meta-analysis, RAND researchers published a review of the literature published between 1985 and 2006 on prescription drug cost sharing, which included co-payments, tiering, coinsurance, pharmacy benefit caps or monthly prescription limits, formulary restrictions, and reference pricing[4]. In summarizing 132 articles, they concluded:
| “ | 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.[4] | ” |
[edit] Notes
- ^ University of Puget Sound. Benefits update. 2006 medical plan frequently asked questions. What is the difference between co-payments, coinsurance, and deductibles? Retrieved November 10, 2008.
- ^ Cole JA, et al. Drug copayment and adherence in chronic heart failure: effect on cost and outcomes. Pharmacotherapy 2006;26:1157-64.
- ^ Dormuth CR, et al. Impact of two sequential drug cost-sharing policies on the use of inhaled medications in older patients with chronic obstructive pulmonary disease or asthma. Clin Ther 2006;28:964-78; discussion 962-3.
- ^ a b Goldman DP, Joyce GF, Zheng Y. Prescription drug cost sharing: associations with medication and medical utilization and spending and health. JAMA 2007;298:61-69.
[edit] See also
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