Friday, August 25, 2006

Medicare Drug Benefit Won't Help All Equally

(HealthDay News) -- Although the new Medicare drug benefit is likely to result in small savings for most seniors, these savings aren't likely to be divided equitably among all groups, a new study finds.
The most vulnerable seniors, namely blacks, Hispanics, low-income seniors and seniors with chronic disease, still face sizable out-of-pocket costs, according to the study that appears in the January/February issue of Health Affairs.
"Although people are going to save money on average out-of-pocket costs, the benefit is not ideally structured to help people with chronic diseases," said study author Dr. Walid Gellad, a research fellow and internist in general medicine at Brigham and Women's Hospital in Boston. "In general, the benefits are not going to be equally distributed."
"Most experts would say these findings are predictable," added Robert M. Hayes, president of the Medicare Rights Center in New York City. "Fundamentally, when we have a for-profit insurance industry administering a benefit, of course sicker people will be paying more and more because they cost more, but also because the insurance companies have every financial incentive to find customers who don't need expensive medications. Some refer to it as a 'sick tax.' If you need the benefit, it'll help you the least."
Ironically, the study appears alongside another study in the journal that reports overall prescription drug cost growth is actually slowing.
Medicare Part D, a prescription drug benefit created to ease the financial burden of soaring drug costs for America's seniors, became effective Jan. 1. The plan works with private plans to supplement drug costs.
So far, the plan seems to have gotten off to an uneven start. The Los Angeles Times reported recently that one man spent 15 1/2 hours trying to get through to his mother's insurer on the phone. And Hayes said he's considering bringing in a psychologist to help his young staffers who are getting calls from people they can't help. "They're so upset," he said. "My education director just asked if we could bring in secondary trauma counseling."
While much research has focused on the low-income segment of the population that is eligible for both Medicare and Medicaid, those who are not eligible for such subsidies are often left out of analyses, Gellad said.
Gellad and his colleagues analyzed out-of-pocket drug spending for seniors over the age of 65 who were not eligible for additional subsidies and who did not have prescription coverage through their employers. Within this group, the study authors focused on the "most vulnerable" groups, including ethnic and racial minorities, the "near poor" and those with three or more chronic health conditions.
Overall, the study found that seniors will save $478 under the new drug benefit, but these savings are not divided equally. Blacks stand to save 26.9 percent of their current out-of-pocket costs, Hispanics 23.3 percent and whites 34.3 percent. Blacks and Hispanics will save an estimated $237 less annually than whites, the study concluded.
"Blacks and Hispanics are going to save, but they will save less than whites both in absolute dollars and as a percent of their current out-of-pocket costs," Gellad said.
The near poor, or seniors with incomes below $21,450 who don't qualify for subsidies, will save $525 annually on average. "It's a decent amount of money but they still have $957 in out-of-pocket costs, which is still a lot when you consider their income," Gellad pointed out.
More than one-third (35 percent) of people with three or more chronic conditions will have total costs that fall into the so-called "donut hole," the gap in coverage resulting from the deductible and benefit structure. This means they may end up paying 100 percent of the cost of any new medications, the study concluded.
Should people with employer-sponsored coverage join the Medicare drug benefit, they will end up paying $123 more in out-of-pocket costs, the study found.
"Dually eligible people are going to have great savings but no one seems to talk about these other people," Gellad said. "Do we need to expand subsidies to include these people who are still poor, and are still going to have trouble with medicines?"
Despite the continuing individual burden of health-care costs, another study in the same issue of the journal found a slowing in U.S. health spending in 2004, to its lowest level in four years.
This decline was aided largely by a decline in prescription drug spending, the study found.
National health-care spending grew 7.9 percent in 2004, down from 8.2 percent in 2003, while growth of drug spending slowed to single digits (8.2 percent) for the first time in a decade.
Despite this modest good news, U.S. health spending is still huge, at $1.87 trillion in 2004, according to the report, which was prepared by economists from the Centers for Medicare and Medicaid Services. This amounted to $6,280 per person. That total spending figure is nearly twice that of a decade ago.
"There's never going to be a rational expenditure of U.S. health dollars until we get something like a Medicare for America program going," Hayes said. "We will continue to waste billions and billons of dollars unless we have a rational health-care system and, at this point, there's no system at all."
More information
Visit Medicare for more on the new prescription drug benefit.

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