Obamacare ends the donut hole

If you thought donuts were bad for your health, consider donut holes. Specifically, the donut hole sitting smack in the middle of Medicare Part D, the program helping senior citizens pay for their medications.

The donut hole is a gap in coverage causing people, once they’ve received a certain level of financial support for their prescriptions, to have to go it alone for a while, bearing all their medication costs until they’ve spent so much money that a higher level of financial support kicks in.

According to a study in the June 5 issue of the Annals of Internal Medicine, once patients reach the donut hole, they understandably look for ways to save money on their medications. Pain relievers? Patients aren’t likely to scrimp on those pills. After all, no pill, no pain relief. Medications for heart burn? Same basic idea. Daily symptoms are there to remind people of the value of these medicines. Blood pressure and cholesterol pills, on the other hand, are very easy medications to forgo. No one feels any different when their cholesterol rises 30 points.

Obamacare will put an end to the donut hole. It will provide more continuous coverage of Medicare recipients’ prescription costs. This is good news for those of us interested in helping patients prevent things like heart attacks, which these blood pressure and cholesterol pills do well.

But it’s bad news for those of us interested in controlling health care expenses. Because those blood pressure and cholesterol pills, even though they prevent heart attacks and strokes and kidney failure, don’t save money.

How can we help people afford their medications without driving up the cost of Medicare to unsustainable levels? Medicare needs to revise its prescription coverage to better incentivize patients to take the medications most likely to improve their health. Cholesterol pills perform wonders for people at high risk of heart attacks—people who have already experienced heart attacks being a perfect example. But in recent years, physicians have begun prescribing these pills to people who stand little to gain from them: people with extremely low risk of experiencing a heart attack in the near future, for example. This aggressive prescribing of cholesterol pills has been promoted heavily by industry, which has been funding the experts who sit on the panels and decides what the “clinical indications” are for these products. In blood pressure treatment, for instance, we used to be happy when people had blood pressures of 140 over 90. Now, many consider those numbers to be dangerously high.

We need to adopt a variable co-pay system—what some experts have called Value Based Insurance Design—that makes medicines cheapest, even free, for people who stand to benefit the most. At the same time, we need to make medications more expensive for patients who have little to gain. If such patients want to take pills that stand a 1 in 1,000 or 1 in 10,000 chance of benefiting them, they should fork over their own money.

Not all donuts should be gratis.

Peter Ubel is a professor at Duke University’s Fuqua School of Business and at the Sanford School of Public Policy. This commentary was originally published in The Durham Herald-Sun on July 2, 2012.