WASHINGTON, July 13 (UPI) -- Six and a half million seniors already incurring high prescription-drug costs could be paying thousands of dollars more for medication expenses, even after Medicare's drug benefit begins in 2006, a new study has warned.
Researchers at Penn State University have concluded that gaps in Medicare's Part D drug benefit, scheduled to begin next January, will leave many beneficiaries responsible for high medication costs the program is intended to prevent.
The benefit pays for 75 percent of seniors' drug costs, after a $250 deductible and around $35 per month in premiums. Coverage stops completely at $2,250 in personal spending, then resumes after $5,100 in costs, after which the program pays 95 percent of all drug bills.
As many as 15 million beneficiaries living near the poverty line will be eligible for richer benefits that cover most premiums and close the coverage gap -- often referred to as Medicare's "donut hole."
According to the Penn State study, several million seniors will enjoy comprehensive coverage through benefits offered by employers, but 40 percent of the 16 million middle- and higher-income seniors who are expected to rely on Medicare as a sole source of prescription-drug coverage will have to confront the $2,250 coverage limit, beyond which they will be forced to pay all of their costs.
The study appears in the July/August issue of the journal Health Affairs.
The 6.5 million beneficiaries who exceed the limit will face an average of $11,000 in personal costs during the three years between 2006 and 2008. Another 2.4 million seniors who spend $5,100 or more on prescriptions annually still will have to pay an average of $12,300 out-of-pocket during the same period.
"That group is really going to confront some high costs," said Dennis G. Shea, one of the study's authors.
"People think Medicare covers everything, and a lot of times their expectations are going to come up short, said Shea, who is chair of PSU's Department of Health Policy and Administration.
Congress enacted Medicare's premiums and its donut hole as a way to hold down the overall cost of the drug benefit, which is already slated to top $750 billion over 10 years.
Medicare officials disputed the study's conclusions, however, saying it grossly overestimates the number of seniors who will confront high costs.
Gary Karr, a spokesman for the Centers for Medicare and Medicaid Services, called the study's estimates "drastically wrong." He placed the actual number of beneficiaries who exceed the limit at around 4 million.
"Right now, Medicare is paying nothing for those folks -- not a dime. Now they're going to be getting significant new help," Karr said.
Shea said beneficiaries at risk of reaching the coverage gaps should be cautioned to set aside money to cover out-of-pocket costs. He added that researchers will be watching for seniors who skip medications because of the cost, and policymakers "are going to have to watch closely to see if this is really the benefit that's right for older people."
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Todd Zwillich covers healthcare policy for UPI Science News. E-mail: [email protected]
