The Price of Health: It Pays to Shop Around for a Medicare Drug Plan
Consumer advocates have warned seniors again and again to run the numbers before picking a Medicare prescription drug plan to figure out how much they're likely to pay out of pocket for the drugs they need. A new study spells out the cost differenceswhich can total thousands of dollarsbetween plans within a state or between states for seniors with common conditions and drug regimens.
Researchers at the University of Michigan used the drug regimens of four actual patients to compare the variability in costs due to differences in premiums, copayments, and deductibles for drug plans in all 50 states and the District of Columbia. The patients studied were being treated for a variety of common conditions, including high blood pressure, type 2 diabetes, high cholesterol, depression, osteoporosis, chronic arthritis pain, and heart disease.
The study, which was published in the January issue of the Journal of General Internal Medicine, found that annual out-of-pocket costs for seniors with the lowest-cost drug plan who lived in different states could vary by $10,000 or more for the same drug treatment regimen. Within states, the difference between the lowest and highest cost plans also exceeded $10,000 in many cases.
For example, a 78-year-old woman taking drugs for osteoporosis, high blood pressure, and chronic arthritis pain might pay $4,113 out of pocket if she lived in Michigan on the lowest-cost plan. But if she lived across the border in Ohio and picked the lowest-cost plan, her out-of-pocket costs might be $16,856, a difference of $12,743. (The national average for her plan costs would be $8,146.) Within her state of Michigan, there would also be significant differences: $13,806 between the lowest- and highest-cost plans for her drug regimen.
"Small changes in the mix of drugs someone takes can lead to very different results in terms of what is the most favorable plan," says Jack Hoadley, a research professor at Georgetown Health Policy Institute. "Consumers who want the best buy for themselves have to look very carefully."
The study also looked at how affordable the plans were for seniors based on the cost-of-living-adjusted average incomes in different states. It found that in two of the four cases, expected drug costs were comparatively higher in states with comparatively lower average incomes. "The people who can least afford it are paying higher prices," says Matt Davis, the study's lead author, who is an associate professor of pediatrics, internal medicine, and public policy at the University of Michigan.