CHICAGO, Illinois—Out-of-pocket (OOP) expenditures for Medicare-age arthritis patients, including copayments and deductibles not covered by insurance, will be substantially reduced by the new Part D drug benefit but will still be above 2003 levels, according to Ithai Z. Lurie, PhD, and colleagues.¹

In an analysis using data from the Medical Expenditures Panel Survey, Dr. Lurie, who is at the US Department of the Treasury in Washington, DC, reported, “Median total OOP expenditures for persons with arthritis showed an increase of 52.4% between 1998 and 2004 (7.3% annually beyond inflation). Median OOP expenditures for prescription medication showed larger growth, at 72%.”  This included an increase in median adjusted expenditure for prescription drugs from $415 to $714 (in 2004 dollars) and from $757 to $1154 for total OOP expenditures.

OOP costs rocket past inflation rate

Medicare Part D was designed in part to reduce these OOP expenses. Dr. Lurie and colleagues used a simple simulation to extrapolate the data through 2006, to include the effects of the new benefit. The model predicted that Medicare Part D would lower both total and prescription OOP expenditures to near 2003 levels, with median OOP expenditures dropping from $1258 in 2005 to $1046 in 2006. “Medicare Part D is projected to impede OOP prescription medication expenditures by 2006, but would not bring them below 2003 levels, for each of the median, 75th percentile, and 90th percentile levels,” the authors wrote.

“While the maximum impact of Medicare Part D coverage would clearly have a substantial effect on constraining overall OOP burden, it would not be sufficient to offset the increasing burden faced by individuals over time. The OOP expenses in 2006 are still estimated to be greater than those for 2003, even under generous assumptions regarding the people would use those benefits. As individual drug expenditures move into ranges where copayments drastically increase under Medicare plans, large increases in OOP expenditures can again be expected,” Dr. Lurie warned.

In an accompanying editorial, Edward Yelin, PhD, of the University of California, San Francisco, challenged the assumption that requiring “cost-sharing” OOP payments “fosters prudent buying by creating an incentive for the patient to equilibrate costs and benefits more thoroughly.”² According to Dr. Yelin, increasing the patient's OOP burden reduces healthcare utilization, but it may increase outpatient costs, not save money appropriately, and create heightened economic and medical difficulties, especially for the poor and poorly educated.

“We know from other studies that persons with arthritis will respond to the economic incentives targeted on them by reducing their use of services for which cost-sharing is imposed and, perhaps, by increasing their use of services without additional cost sharing, if that is possible,” Dr. Yelin said.

“What we do not know, but must, is whether the cost-sharing we impose has a harmful effect on [patients’] health. Subjecting them to increased cost-sharing in the absence of such knowledge is ethically indefensible, as would be any disproportionate impact on the poor or poorly insured, an outcome that is almost certain since cost-sharing is not scaled to income.”

Reference

1. Lurie IZ, Dunlop DD, Manheim LM. Trends in out-of-pocket medical care expenditures for Medicare-age adults with arthritis between 1998 and 2004. Arthritis Rheum. 2008;58:2236-2240.
2. Yelin E. Out-of-pocket payments in arthritis: spur to prudent purchasing or red herring? (Editorial). Arthritis Rheum. 2008;58:2225-2227.