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Press Release


Nov 17, 2000

A Medicare Rx Drug Benefit: Whose Needs Will Be Met?

Income Test Would Leave Out Those In Need Out-Of-Pocket Costs Affect All Beneficiaries

Most Medicare beneficiaries will not qualify for prescription drug coverage under Medicare if annual income alone is used to determine eligibility, according to a study released today by The Commonwealth Fund. Many current proposals for providing a drug benefit under Medicare would cover only those with incomes at the federal poverty level or slightly above, leaving most beneficiaries in the same situation they are in now-lacking access to medicine that is vital to their health and well-being. Employing a broader definition of need to include beneficiaries without continuous and stable coverage, those with high expenditures, and those with multiple chronic conditions, makes nearly 90 percent of beneficiaries eligible for coverage, according to Designing a Medicare Drug Benefit:

  • lack of access to affordable drug coverage
  • lack of stable drug coverage
  • high out-of-pocket spending on drugs
  • high total drug expenditures
  • chronic disease burden
IMPORTED: www_commonwealthfund_org__usr_img_stuart_drug_01_11172000.gif "Medicare beneficiaries' need for consistent and stable prescription drug coverage does not cleave neatly to annual income as a percent of the federal poverty level or any single measure of need," said Stuart, lead author of the report. "Whatever income level that might be chosen as the cutoff point for prescription drug coverage under Medicare would inevitably leave out a significant portion of beneficiaries." By using the federal poverty level as a cutoff for eligibility for a Medicare drug benefit, no more than 27 percent of alternative-need beneficiaries would be covered. Raising the cutoff to 150 percent of federal poverty would increase the coverage rate of beneficiaries with these alternative needs to between 40 and 50 percent, but would still exclude more than half of the Medicare population. IMPORTED: www_commonwealthfund_org__usr_img_stuart_drug_02_11172000.gif "Establishing a prescription drug benefit under Medicare is a task that must be undertaken with great care if it is to be effective and equitable," said Karen Davis, president of The Commonwealth Fund, which supported the study." This research shows that limiting eligibility for a drug benefit to low-income beneficiaries will exclude a significant number of those with true need for assistance." Overall, slightly more than one of four Medicare beneficiaries had annual incomes below the federal poverty level in 1996, with another 17 percent falling between 100 and 150 percent of the level. Compared with income-based criteria, the study's alternative criteria provide a more expansive definition of need. The share of Medicare beneficiaries meeting any one of these alternative need definitions varies from less than 10 percent to nearly 50 percent. In addition, each need criteria defines substantially different eligible populations in relation to each other. For example, compared with disabled beneficiaries under age 65, a greater percentage of the elderly age 80 or older meet the criteria of lack of any drug coverage (29% vs. 21%) or heavy chronic disease burden (59% vs. 45%). If need, however, is defined as lack of stable coverage, high out-of-pocket drug costs, or high total drug costs, then the percentage of disabled beneficiaries who are needy is greater than the 80-plus age group.

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Nov 17, 2000