Published Online: Saturday, July 1, 2006

Efforts by Medicare officials to cut costs by imposing benefit limits on prescription drugs have backfired, according to a new study by researchers at Kaiser Permanente. The study, which included 200,000 Medicare beneficiaries in northern California, found that patients who reached the limit of their drug benefits responded by reducing medication levels or stopping taking their prescriptions altogether. These actions increased their health costs as a result of higher blood pressure, blood sugar, and cholesterol levels.

The research, which was reported in the New England Journal of Medicine (June 1, 2006), compared the health of patients on Medicare Plus Choice health plans, who had a $1000 cap on prescription drugs, with the health of patients with no caps because their employers subsidized their drug coverage. According to the study results, patients subject to the caps spent 31% less on prescription drugs, but their overall medical costs were the same because of more visits to hospitals and emergency rooms.

"The net effect was no savings," a Kaiser Permanente researcher said. "One can't look at drug costs alone. You have to look at the whole health care picture for patients as well as society at large."

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