Medicare Prescription Drug Benefit Lowered Out-Of-Pocket Costs For Beneficiaries

Armen Hareyan's picture

Medicare Prescription Drug Benefit

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


According to the study, thesavings amounted to an additional 14 days of medicine for those whoenrolled in the drug benefit, or a 19% increase in prescription druguse. Researchers found that distributed across the pool of allMedicare beneficiaries, the drug benefit decreased out-of-pocketexpenses by 13.1%, or $5 per month, and increased prescription use by5.9%, or by four days of pills. Alexander said that while some mightconsider savings from the benefit "insufficient and not worththe money," other research indicates that increased prescriptiondrug usage might lead to fewer physician and hospital visits, whichcould further decrease costs.

Alexander said, "We found that ithad a modest but significant effect on both savings and drug use,"adding, "Despite extensive debate, it was not clear to whatextent Part D would save people money or allow them to obtain drugsthey might not otherwise be able to afford."

An "audioeditorial" that accompanied the report found that the study wasinsufficient because it did not examine health outcomes of thebenefit. However, the editorial attributed the shortcoming to thefederal government, which has not released Medicare claims data thatcould be used to examine the quality of care beneficiaries receiveunder the drug benefit, as well as whether prescription drugs areused appropriately (Japsen, Chicago Tribune, 1/9).

Reprinted with permission can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at The Kaiser Daily Health Policy Report ispublished for, a free service of The Henry J.Kaiser Family Foundation.


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