Medicare Prescription Drug Benefit Lowered Out-of-Pocket Costs For Beneficiaries By 17% In 2006, Study Finds

Main Category: Medicare / Medicaid / SCHIP
Article Date: 10 Jan 2008 - 12:00 PDT

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Medicare's prescription drug benefit led to a 17% reduction in out-of-pocket costs, or $9 per month, for beneficiaries who enrolled in the program in 2006, according to a study published online Tuesday on the Annals of Internal Medicine Web site, the Chicago Tribune reports. For the study, G. Caleb Alexander, assistant professor of medicine at University of Chicago Medical Center, and colleagues compared out-of-pocket costs and the number of pills purchased by those eligible for the benefit with those who were not eligible. Researchers also compared health costs for individuals eligible for Part D who enrolled in the program with those who did not sign up. The study examined usage in the first year of the program.

According to the study, the savings amounted to an additional 14 days of medicine for those who enrolled in the drug benefit, or a 19% increase in prescription drug use. Researchers found that distributed across the pool of all Medicare beneficiaries, the drug benefit decreased out-of-pocket expenses by 13.1%, or $5 per month, and increased prescription use by 5.9%, or by four days of pills. Alexander said that while some might consider savings from the benefit "insufficient and not worth the money," other research indicates that increased prescription drug usage might lead to fewer physician and hospital visits, which could further decrease costs. Alexander said, "We found that it had a modest but significant effect on both savings and drug use," adding, "Despite extensive debate, it was not clear to what extent Part D would save people money or allow them to obtain drugs they might not otherwise be able to afford."

An "audio editorial" that accompanied the report found that the study was insufficient because it did not examine health outcomes of the benefit. However, the editorial attributed the shortcoming to the federal government, which has not released Medicare claims data that could be used to examine the quality of care beneficiaries receive under the drug benefit, as well as whether prescription drugs are used appropriately (Japsen, Chicago Tribune, 1/9).

The study is available online.

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