Since 1995, the Program on Medicare's Future has worked to advance the goals of the Medicare program in meeting the health needs of the nation's elderly and disabled populations. Over the past several years, the Fund has contributed significantly to the debate over fulfilling one of those needs—affordable prescription drugs. That debate culminated in the December 2003 passage of the largest benefit expansion in program history: the Medicare Prescription Drug, Improvement, and Modernization Act (MMA).
The new prescription drug benefit will provide significant subsidies for low-income beneficiaries by paying nearly all their drug costs, but it does not go into effect until 2006. In the meantime, low-income seniors can sign up to receive a drug discount card that will provide them with $600 toward their yearly drug costs. Following the enactment of MMA, the Fund announced that one of its top priorities was seeing most of the nation's low-income beneficiaries enrolled in the discount card program.
Research has shown, however, that only about 1.5 million of 7 million low-income eligible Medicare beneficiaries are signed up to receive other subsidies designed to assist them with their prescription drug costs.
(32) Consequently, many of the Fund's current efforts are dedicated to increasing enrollment. For example, the National Academy of Social Insurance is exploring administrative and legislative options to improve enrollment in all Medicare low-income subsidy programs. In addition, the National Council on the Aging is testing a community-based approach to reaching low-income seniors with BenefitsCheckUp, a Web-based tool, and the state of Minnesota is using Fund support to provide one-on-one assistance to help seniors fill out enrollment forms.
While the Medicare drug benefit is of great assistance to the very poor, it contains significant gaps in coverage for the "near poor"—those whose incomes are low, but not quite low enough to receive the maximum benefit. During the MMA debate, Dennis Shea of the University of Pennsylvania teamed with Bruce Stuart and colleagues at the University of Maryland to show that even with the drug benefit, the near-poor would still devote between 12 percent and 15 percent of their incomes to prescription drugs in 2006.
(33)This situation will only worsen as beneficiaries' expenses rise with drug costs but incomes fail to keep up. The researchers will continue to examine the impact of the drug benefit design on the near-poor in future years.
Americans with chronic conditions and persistent high annual drug costs are also at risk, as illustrated by Marilyn Moon in a June 2004 Fund issue brief.
(34) The drug benefit contains a deductible of $250 and provides no coverage for costs between $2,250 and $5,100. Beneficiaries with annual drug costs of $5,000, for example, will only receive $1,500 in drug assistance from the benefit and will be personally responsible for the remaining $3,500. Stuart and others are examining the "rollercoaster" created by fluctuations in out-of-pocket drug costs as people with persistent high drug costs move in and out of coverage each calendar quarter.
