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Dynamics in Drug Coverage of Medicare Beneficiaries: Finders, Losers, Switchers

Although nearly 70 percent of all Medicare beneficiaries are reported to have prescription drug coverage, the continuity of that coverage is in question. The authors of this study found that while drug coverage rates may have improved from 1995 to 1996, the number of beneficiaries finding, losing, and switching their drug coverage was almost as large as the number with stable benefits.

The often precarious nature of prescription drug coverage for Medicare beneficiaries and the sources of instability are the subject of "Dynamics in Drug Coverage of Medicare Beneficiaries: Finders, Losers, Switchers," published in Health Affairs (March/April 2001) with support from The Commonwealth Fund. Health policy analysts Bruce Stuart and Becky Briesacher of the University of Maryland and Dennis Shea of Pennsylvania State University found that in 1995–96, fewer than half of all beneficiaries were continuously insured for prescription drugs, while nearly a third gained, lost, or had spells without drug coverage.

The authors used a two-year time frame to help distinguish persons who actually lost or gained prescription coverage from those who had moved in and out of coverage over time. The study also captured changes in drug coverage that occur at the beginning of the calendar year, when many employers make benefit decisions.

For the 1995-96 two-year period, about 46 percent of beneficiaries had continuous prescription drug benefits (in either the same plan or successive plans), six percentage points lower than those with coverage either in 1995 or 1996 alone (53%). Nearly one of three beneficiaries had gaps in their coverage at some point during the two years, compared with one of six beneficiaries in 1995 alone. People who have spells without insurance are more likely to encounter health care access and cost problems, more likely to postpone needed care, and less satisfied with the care they do receive.

Aside from the source of coverage, the strongest predictors of prescription drug coverage, the authors found, are geographic residence, income, and the burden of chronic illness. Independent of all other factors, where one lives can boost the probability of having drug coverage by up to 300 percent. Midwest residents are much less likely to have stable coverage than beneficiaries in any other region of the country; those in western states have the most stable benefits.

Even if most switches in drug coverage are voluntary in the sense that beneficiaries have a choice to retain, add, or drop coverage, the decision to maintain stable prescription drug coverage may not be a realistic option for many of them.

Facts and Figures

  • More than 30 percent of noninstitutionalized Medicare beneficiaries experienced gaps in their prescription drug coverage over the 1995–96 period, compared with less than 17 percent in 1995 alone.
  • Beneficiaries with annual incomes less than $10,000 were 2.5 times as likely to have intermittent prescription coverage as those with incomes exceeding $50,000.
  • Residing in a state with a pharmaceutical assistance program increases a Medicare beneficiary's probability of having continuous drug coverage by nearly 60 percent and partial coverage by nearly 20 percent.

Publication Details



"Dynamics in Drug Coverage of Medicare Beneficiaries: Finders, Losers, Switchers," Bruce Stuart, Dennis Shea, and Becky Briesacher, Health Affairs 20, 2 (March 2001): 86–99