Watch out for that hole...
The Fresno Bee editorial page picked up on a study published in the New England Journal of Medicine about the impact of deductibles and copays on compliance. The study analyzed what happened to seniors once they met their coverage limit under a drug program known as Medicare Premium Plus. (this limit was set at $1000)
The results are not terrible surprising - visits to the ER rose, compliance with drug regimens diminshed, blood pressure rose.
We may well see the same result around October, when many seniors will hit the "doughnut hole"; after they have incurred about $2250 in costs, they are responsible for the next $3000 or so, after which coverage kicks in again. If they stop taking their medications, we can expect to see a bump up in ER visits and potentially other services. When you add in their copays and the doughnut hole payouts, a beneficiary who hits $5100 in total expenditures will have paid $3,600 out of pocket.
About 25% of beneficiaries are projected to hit the doughnut hole; 10% will hit the $5100 level and therefore be defined as catastrophic cases.
It is likely that these folks will be less healthy than the seniors who don't spend that much on drugs. And for many, the drugs are keeping them out of the hospital by managing their blood sugar, hormone levels, lipids, hypertension, psychiatric issues, and chronic pain.
If they stop taking their meds, Part D costs may well come in under projections. The other Medicare "Parts" wiil not be so fortunate.
Comments
The donut hole probably could have been easily avoided if the drug plan were structured with a higher deductible of at least $500 and maybe closer to $1,000. Of course, this would mean that many more (relatively healthy) people would pay more in premiums than they would recover in benefits which is the way true insurance is supposed to work.
Instead, politicians, presumably with plenty of input from the AARP and individual seniors, opted for a strucutre that provided a decent value relative to premiums paid for as many beneficiaries / voters as possible. I think the AARP and seniors should look in the mirror. This appears to be a case of: we've met the enemy and it's us!
Posted by: BC | June 8, 2006 8:32 PM