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TUESDAY, July 8, 2003 (HealthDayNews) -- The two Medicare drug benefit bills that Congress passed last month may not be perfect, but a new study shows how sorely some form of coverage is needed.
Even Medicare recipients with supplemental prescription benefits face potentially steep out-of-pocket expenses, depending on how low their plans cap costs. Roughly one in five Medicare beneficiaries, for example, broke through an annual ceiling of $750 after an average of nine months, shelling out between $564 and $4,201 a year in the process, the study found. Drugs to treat chronic ailments such as diabetes, high cholesterol, and heart and vessel disease are the main drain on the limits of prescription plans.
"We don't know what the [Medicare drug benefit] is going to look like yet, but both the House and the Senate version contain some form of cap," says study co-author Dr. Carol M. Mangione, a physician at the University of California, Los Angeles. "And if that cap is set too low, many patients, and especially those with chronic conditions, are going to run out of benefit before the end of the year."
Many of the most heavily used medications don't yet have cheaper generic alternatives. "It's possible more use of generic medications early in the year would have made people not run out of their benefit so soon," Mangione says.
Mangione's group reports its findings in the July 9 issue of the Journal of the American Medical Association.
Medicare was created in 1965 to provide health insurance for the nation's elderly. The state-federal program now includes some 40 million enrollees, most over age 65, as well as certain others with chronic conditions.
Although the elderly are the nation's biggest consumers of prescription drugs, in 1999 one in four Medicare beneficiaries lacked coverage for such medications.
Last month, the House and Senate each approved versions of a Medicare drug plan. President Bush has pushed hard for a Medicare drug benefit and has said he will sign such a bill; legislators must now hammer the two versions into a compromise package.
Both bills, which would take effect in 2006, carry premiums of about $35 a month, as well as a yearly deductible of $250 or $275. Under the House plan, the government would bear 80 percent of the cost of prescription drugs up to $2,000 a year. Beyond that, Medicare recipients are responsible for everything until a "catastrophic" level of $4,900, after which the government picks up the bill again. The Senate bill has Medicare paying half of drug costs until they reach $4,500 a year. It resumes coverage at 90 percent of charges over $5,800.
The latest study looked at a Medicare + Choice plan in an undisclosed state. These programs let beneficiaries buy prescription drug coverage through a private insurer. Roughly 15 percent of the nation's Medicare recipients, or about 6 million people, participate in Medicare + Choice programs.
Also known as Medicare managed care, the plans pay for prescription drugs but cap the amount at some figure, typically $1,000 a year or less.
Lee Hargraves, a researcher at the Center for Studying Health System Change, says low-income people -- who are very often black and Hispanic -- are drawn to Medicare + Choice programs by the prospect of saving money on their prescriptions. But, Hargraves adds, many quickly tap out their coverage: "The cap is met and they're out of luck."
Of the 438,000 Medicare beneficiaries studied, 22 percent had drug costs that exceeded a cap of $750 a year; 14 percent broke a $1,000 cap; and 4 percent spent more than $2,000 on prescription medications.
Fifteen of the 20 drugs that accounted for the most spending among people who broke their cap levels were medications used to treat chronic conditions. Of those, seven had cheaper generic substitutes.
Mangione cautions that although the cap of $750 seems much lower than what Congress is considering in the House bill, in fact the two figures are similar. That's because the $750 in the study includes only those medication costs borne by the insurer; on average, patients with this cap had another $1,000 or so in out-of-pocket expenses. The House bill, on the other hand, considers all drug-related costs, including the monthly premiums, a deductible, and co-payments.
For a patient with high cholesterol, high blood pressure, and diabetes, the 20 percent co-payment under the House plan could easily run $100 a month, Mangione says.
Vicki Gottlich, an attorney for the Center for Medicare Advocacy, says Medicare beneficiaries shouldn't get too excited by the action in Congress.
"We still think the prescription drug benefit is inadequate," Gottlich says. After considering the annual premiums and deductibles, her group estimates that a person's annual drug costs must exceed between about $800 and $1,000 to realize any savings from the two plans.