Study Examines Cost, Benefits Of Extending Medicare Drug Use

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"A new large-scale study of medical records found that the extra cost of extending prescription coverage to Medicare enrollees was substantially offset by lower spending on other medical care for people who previously had limited or no prescription-drug coverage," The Wall Street Journal reports.

The Journal reports: "The findings could be used to bolster the case for wider drug coverage under new plans that may emerge from the federal government's health-insurance overhaul plan, since it indicates that drug coverage might curb other medical costs. In the study, monthly spending on prescriptions - including both insurers' costs and plan participants' co-pays - rose by $41 after the previously uninsured participants enrolled in Medicare Part D drug plans, compared with people who already had unlimited drug coverage. But spending on other forms of medical care by the newly covered fell by $33 a month. Authors suggested that the "increased use of medication led to improved control of chronic illnesses."

But, The Journal adds: "The study also found that the group with the most generous drug coverage increased spending on both prescription drugs and other medical needs in comparison to the control group, meaning people with strong coverage are more likely to overuse drugs" (Aula, 7/2).

The New England Journal of Medicine published the study that was funded by the National Institutes of Health (Zhang, Donohue, Lave, O'Donnell, Newhouse, 7/2).

NPR also reports on the study and asks the question: "When you give people more access to health care, do costs go up because people start getting a lot of expensive care they may not need? Or do costs go down, because people get the care that keeps them healthy?" NPR notes: "Overall, costs for the Medicare drug benefit ended up being less than expected, but for reasons that weren't expected" (Shapiro, 7/2).

Forbes/Health Day News also reports on the NEJM study as well as another study on Part D, presented at the AcademyHealth meeting in Chicago. Forbes reports: "That research, from the University of Maryland School of Pharmacy and funded by Novartis Pharmaceuticals, found "small but statistically significant" improvements in health status, based on daily activity levels, of those enrollees who previously had no prescription drug coverage. This seemed to correlate with an improvement in greater ability to afford medications, the study found" (7/1).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

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