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'The Business of Health Care Report'

Capping Medicare Drug Benefits Increases Emergency Department Visits, Study Says
07/31/2006

Click to listen to the taped broadcast.

I’m Doug Hawthorne, president and CEO of Texas Health Resources, with The Business of Health Care Report.

Today we focus on the continuing debate over investment in prescription drug benefits as a health care cost-saving measure. At the heart of the controversy is whether Medicare Part D’s prescription drug requirement that seniors pay almost $3,000 out of pocket after a $250 deductible and an initial $500 copay drives up other health care costs.

A study published in the New England Journal of Medicine says yes, shifting more cost of prescription drugs to consumers drives total medical costs higher. The researchers studied an enrolled group of beneficiaries whose annual drug benefits were capped at $1,000. The findings? Patients had a 9 percent higher rate of emergency room visits, a 13 percent higher rate of nonelective hospitalizations and a 22 percent higher death rate. Subscribers with capped drug costs were less likely to take medications for blood pressure, cholesterol and diabetes. Kenneth E. Thorpe, a professor of health policy at Emory University, said, “We may very well be penny-wise and pound-foolish” by expecting savings through coverage caps to offset additional costs to treat chronic disease.

There may be a lesson here for business leaders as we design our benefit plans and as we all consider the importance of disease management and preventive medicine.

For Texas Health Resources and its faith-based hospitals – Harris Methodist, Presbyterian and Arlington Memorial – I’m Doug Hawthorne.

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