More Care Means Better Health, But Not Always

Lipitor pills and bottle i i

Lipitor and other cholesterol-lowering medications are covered by the Medicare Part D plan, which increased prescription drug coverage for seniors in 2006. Scott Olson/Getty Images hide caption

itoggle caption Scott Olson/Getty Images
Lipitor pills and bottle

Lipitor and other cholesterol-lowering medications are covered by the Medicare Part D plan, which increased prescription drug coverage for seniors in 2006.

Scott Olson/Getty Images

It's a question that hangs over efforts to change the health care system: When you give people more access to health care, do costs go up because people start getting a lot of expensive care they may not need? Or do costs go down, because people get the care that keeps them healthy?

Researchers looked at the issue in a new study published Thursday in the New England Journal of Medicine. They studied another recent expansion of health care, when, in 2006, Medicare started paying for prescription drugs for seniors for the first time. The researchers found that people did spend more on drugs, but those who had little to no drug coverage reduced what they spent on going to doctors and hospitals.

"There was a debate when Part D was being enacted," says Harvard University researcher Joseph Newhouse. "Proponents of the drug benefit wanted to argue that it would save money elsewhere even though it obviously would cost money to buy the drugs. And the opponents argued that it would not save money elsewhere."

So Newhouse and his co-researchers studied what happened. They looked at how much Medicare beneficiaries spent on medications and then on going to doctors and hospitals — two years before and two years after they got the new drug coverage.

They looked at people who had no drug coverage before. And they looked at people who had just some — but not very much — drug coverage.

Both groups started spending more on drugs. But both groups also spent less on going to doctors and hospitals.

People with no coverage decreased their spending on health care, not including the cost of drugs, by $33 a month, and those with little coverage decreased theirs by $46 a month.

Newhouse says these people got access to preventive care that kept them healthy — and it ended up saving Medicare money. "People have better insurance, they use more, and that's true in drugs," he says. "And in the case of drugs for chronic conditions — that people should be taking their medications to control their conditions such as high blood pressure or diabetes — that can prevent future costs."

But there was another group Newhouse looked at: People who already had very good drug coverage and then got more under Medicare. They also spent more on drugs. But unlike the other groups, their visits to doctors and hospitals went up, and they ended up increasing their health care spending by $30 a month.

Newhouse says this shows that sometimes people can get too much care — especially the elderly, who use more medications than any other group.

"There's some over-prescribing of drugs in the elderly," he says. "The elderly frequently have pillbox after pillbox in their medicine cabinet. Some of these drugs may have side effects that can actually raise costs, in the worst case by precipitating some kind of hospitalization, but in any event precipitating doctors visits and monitoring to see what's going on."

Health care is complicated, and practices by patients and physicians evolve over time. So it's hard to foresee the consequences of change. Overall, costs for the Medicare drug benefit ended up being less than expected, but for reasons that weren't expected, says Tricia Neuman, who runs the Medicare Policy Project of the Kaiser Family Foundation, a private, nonprofit health care foundation.

"There were things that happened that weren't predicted, and one is an overall reduction in the growth in drug spending in the nation as a whole, and people changed their practices. A lot of people changed from brand names to generics, which had an effect on overall spending," Neuman says.

"Those two factors illustrate why it's a combination of art and science that is needed to pull together cost estimates."

The new study looks at a sample of Medicare recipients, and the researchers say they can't make conclusions about the entire Medicare Part D program. But they suspect that the savings to Medicare came from people getting access to drugs that prevented other problems, which in general offset the higher costs of paying for the drugs themselves and the higher use of doctors and hospitals by some.

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