PAMI stopped indiscriminately granting 100% free coverage for medications. From now on, only the lowest-income members and those who manage an exception procedure will have free medications. The rest must finance part of the cost of the medications they consume. The change generated a broad and energetic rejection arguing that serious harm is inflicted on a very vulnerable segment of the population.
Prices play two fundamental roles in the functioning of the economy: They encourage production and induce responsible consumption, avoiding overconsumption.. The case of electricity is very exemplary. When the government decided to impose a low price for electricity, electric companies were discouraged from producing and distributing electricity and families were encouraged to increase consumption, which led to repeated power outages.
In the case of medicines: Does free distribution promote overconsumption? There is no official information available that would allow for a conclusive answer, but one way to provide evidence on the subject is by comparing the spending on medicines of people with and without coverage. According to the National Household Expenditure Survey 2017 – 2018 of the INDEC corresponding to the entire population, the following relationship is observed:
- Urban households allocate 2.7% of their expenses to the purchase of medicines.
- Families without social work or prepaid coverage assign 1.7% of your budget.
- Families with coverage assign 3.0% of your budget to purchase medicines.
These data show that Families with coverage spend much more on medications than families without coverage. Given that families with coverage pay between 50% and 60% of the price of the medication (social insurance pays the remaining 50% – 40%), the total expenditure on medications by families with coverage would be equivalent to 6% of the budget. Although families without coverage may be underconsuming, the fact that the difference with families with coverage is more than 3 times is highly suggestive that the latter may be overconsuming medications. In other words, the indiscriminate distribution of free medications may be generating an exaggerated consumption of remedies.
Overconsumption of medications is as or more harmful to health than underconsumption.. The reason lies in a concept called iatrogenesis, which is the unwanted negative side effect caused by a legitimate and endorsed medical treatment. That is, even when the medication is correctly prescribed, it has unwanted negative side effects. These negative effects are enhanced when both the doctor and the patient are induced to wasteful consumption. This is the reason why a good health policy is based on ensuring responsible prescription of medicine, avoiding free use. Only as an exception, provide free access for patients who do not have the financial means to pay for a prescribed medication and under strict control.
A simple rule is that low-priced medications are 100% paid out of pocket, mid-priced medications are 60% out-of-pocket and 40% for coverage, and high-priced and chronic medications are 100% paid for coverage. . This combination does not induce overconsumption and reduces the risks of underconsumption. For low-income patients, a higher percentage of coverage can be supplemented in order to reduce out-of-pocket expenses. In this sense, the rule adopted by PAMI is not good. It maintains 100% free service for low-income retirees (leaving the door open to overconsumption by the retiree and third parties linked to the retiree) and very bureaucratic in-person procedures for retirees who exceed that income threshold, but qualify for an exception.
The free and indiscriminate distribution of medicines is bad policy. It generates exaggerated income for manufacturing and distribution companies and harms retirees. Both because of the risks derived from overconsumption and because what is spent more on medicines is paid less in doctor’s fees.
by Jorge Colina
