The prescription drug benefit, launched in January 2006, fills a serious gap in essential coverage for beneficiaries, particularly those with low incomes or chronic illnesses. As of the end of the first open enrollment period, 22.5 million beneficiaries were enrolled in standalone prescription drug plans or in Medicare Advantage drug plans. The U.S. Department of Health and Human Services has estimated that another 15.8 million beneficiaries have comparable coverage through an employer plan or alternative source.
(1) Still, more than 4 million beneficiaries—approximately 10 percent of the Medicare population—lack prescription drug coverage. Moreover, some three-quarters of those uncovered beneficiaries have low incomes and so are particularly vulnerable to the financial burden of high drug costs.
Several projects supported by The Commonwealth Fund have examined how the Part D benefit will affect beneficiaries' access to, and use of, medications prescribed by their doctors. A Fund-supported research team led by the University of Maryland's Bruce Stuart, Ph.D., examined prescription drug utilization and coverage prior to enactment of Part D among beneficiaries residing in nursing homes—a population with a high need for prescription medications. Of this group, 20 percent had no drug coverage, while another 60 percent had drug coverage through Medicaid (which no longer applies to Medicare beneficiaries beginning in 2006). These findings indicate that Part D will be extremely important to ensuring access to needed medications for this vulnerable group.
(2)An analysis of private drug plan benefit designs and formularies in the four most populous Medicare states, led by Tanisha Carino, Ph.D., of Avalere Health, revealed wide variation in rules requiring enrollees to obtain prior authorization for medications, as well as in the number of drugs covered. In particular, plans with lower premiums tended to have a greater number of formulary tiers. The researchers found that the high copayments in some of these tiers can hinder access to certain drugs—typically, those that are more expensive.
