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. 2009 Mar-Apr;28(2):w317-25.
doi: 10.1377/hlthaff.28.2.w317. Epub 2009 Feb 3.

The effects of the coverage gap on drug spending: a closer look at Medicare Part D

Yuting Zhang  1 , Julie Marie Donohue, Joseph P Newhouse, Judith R Lave
Affiliations

The effects of the coverage gap on drug spending: a closer look at Medicare Part D

Yuting Zhang et al. Health Aff (Millwood). 2009 Mar-Apr.

Abstract

We calculated prescription drug usage in two groups of Medicare beneficiaries: employer group with no coverage gap, and individual Part D group with no coverage or some generic drug coverage in the coverage gap. Among those with employer coverage, 40 percent reached the doughnut hole, compared with 25 percent of those without such coverage. Overall, 5 percent went through the doughnut hole to reach the catastrophic coverage level. Those lacking coverage in the doughnut hole reduced their drug use by 14 percent; those with generic coverage reduced their use by 3 percent. Coverage of generic drugs with a $0-$10 copayment in the doughnut hole could be financed by, at most, a six-to-nine-percentage-point increase in initial coinsurance.

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Figures

EXHIBIT 3
EXHIBIT 3. Annual Out-Of-Pocket Spending On Prescription Drugs Among Elderly Medicare Beneficiaries In Part D And Employer-Group Plans, 2006
SOURCE: Authors’ calculations using study population as described in the text. NOTES: Bars labeled 0 months represent the average annual out-of-pocket drug spending among beneficiaries who did not spend $2,250 or more in 2006 ($2,250 is the level of spending at which the so-called doughnut hole is reached). The bars labeled 1 month display the average out-of-pocket drug spending among those whose total drug spending reached $2,250 in December 2006; the bars labeled 2 months, among those whose spending reached $2,250 in November 2006; and so on.
EXHIBIT 4
EXHIBIT 4. Percentage Of Elderly Medicare Beneficiaries Reaching The “Doughnut Hole” In Each Month, Among Those In Part D Plans With Total Drug Spending Greater Than $2,250 In 2006, With Hypertension Or Diabetes
SOURCE: Authors’ calculations using study population as described in the text.
EXHIBIT 5
EXHIBIT 5. Percentage Of Elderly Medicare Beneficiaries Reaching The “Doughnut Hole” In Each Month, Among Those In Part D Plans With Total Drug Spending Greater Than $2,250 In 2006, With Hypertension And Comorbidities
SOURCE: Authors’ calculations using study population as described in the text.
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References

    1. Dollar values for the coverage gap and catastrophic coverage region in subsequent years were indexed to increases in drug spending.

    1. Medicare Payment Advisory Commission. Report to the Congress: Increasing the Value of Medicare. Jun2006. [accessed 19 May 2008]. http://www.medpac.gov/publications/congressional_reports/Jun06_EntireRep....
    1. Hsu J, et al. Medicare Beneficiaries’ Knowledge of Part D Prescription Drug Program Benefits and Responses to Drug Costs. Journal of the American Medical Association. 2008;299(16):1929–1936. - PubMed
    1. MedPAC. A Data Book: Healthcare Spending and the Medicare Program. Jun2008. [accessed 1 December 2008]. http://www.medpac.gov/documents/Jun08DataBook_Entire_report.pdf.
    1. Henry J. Kaiser Family Foundation. Medicare Fact Sheet: The Medicare Prescription Drug Benefit. Nov2006. [accessed 1 December 2008]. http://www.kff.org/medicare/upload/7044-05.pdf.

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