Devoting more funds to prescription drugs for Medicare patients saves money in the long run, a study just published in the Journal of the American Medical Association has found. In their study examining the effects of the Part D prescription drug program, Dr. J. Michael Williams, Dr. Alan M. Zalasky, and Dr. Haiden A. Huskamp of Harvard Medical School looked at claims from a group of 6,000 Medicare beneficiaries for two years before and two years after the 2006 implementation of the program. The beneficiaries, who were part of the Health and Retirement Study, included over 2,500 people with generous drug coverage and nearly 3,500 with limited coverage before the program began. The researchers adjusted their data for socio-demographic and health characteristics and used as a control a group from 2002 to 2005 before Part D drug coverage was enacted. What they found was a savings of roughly $12 billion per year.
Improved access to medication, the study found, reduces the later expenses involved with treatment of, and complications from, some chronic diseases, such as diabetes and high blood pressure, and also lowers the number of hospitalizations. Most tellingly, the beneficiaries who d had limited drug coverage prior to Part D demonstrated the greatest savings: approximately $1,200 per year for each person whose drug coverage had previously been non-generous. They were taking their medications more regularly and thus spending less time in the hospital.
ACSH s Dr. Gilbert Ross applauds the program and remarks, This is a classic example of looking at the long term. It turns out that this program is doing exactly what it s supposed to. ACSH s Dr. Josh Bloom is also impressed with the results. This demonstrates the opposite of what we ve been hearing for so long, he says. Although it s convenient to blame greedy drug companies for spiraling health care costs, in fact, the opposite is true. Drug expenditures have traditionally been only a small percentage (5-10 percent) of total health care costs, and now it has been shown that proper use of prescription medications actually saves money. Efforts to contain health care costs should be focused elsewhere. I would start with tort reform.
