Medicare Prescription Drug Benefit Likely To Reduce Out-Of-Pocket Costs for Drugs Beneficiaries, Report Finds
About 8.7 million Medicare beneficiaries who have low incomes and enroll in the new prescription drug benefit are expected to pay 83% less for their medications in 2006 than if the Medicare law did not exist, according to a report released Monday by the Kaiser Family Foundation, the AP/Boston Globe reports (Sherman, AP/Boston Globe, 11/23). Beneficiaries who have incomes of less than 150% of the poverty level and few assets are eligible for federal subsidies that go toward their drug costs (Kaiser Family Foundation release, 11/22).
For the report, researchers used a model developed for the foundation by the Actuarial Research Corporation to project out-of-pocket drug spending for the 29 million people estimated by the Congressional Budget Office to enroll in the drug benefit, which takes effect Jan. 1, 2006 (Pear, New York Times, 11/23). About 75% of Medicare beneficiaries who enroll in the new prescription drug benefit during the first year are projected to pay lower or similar out-of-pocket expenses for prescription drugs than if the Medicare law had not been enacted, the report says (Kaiser Family Foundation release, 11/22).
The report also projects that about 20.3 million beneficiaries who do not receive subsidies will have an average of 28% less in out-of-pocket expenses for prescription drugs (AP/Boston Globe, 11/23).
About 6.9 million beneficiaries are expected to have expenses in the so-called "doughnut hole," or the gap in drug coverage (Wheeler, Gannett/Arizona Republic, 11/23). Of those 6.9 million people who reach the so-called doughnut hole, 28% have annual incomes below 150% of the federal poverty level, 42% are in fair or poor health and 55% are women.
An estimated 3.1 million beneficiaries in the coverage gap are expected to have spending above the $3,600 "catastrophic threshold" and are projected to save 37% in out-of-pocket costs, according to the report (Kaiser Family Foundation release, 11/22).
About one in four beneficiaries, or 7.4 million people, are estimated to have higher out-of-pocket costs under the new benefit, not taking into account premiums for the new coverage or supplemental coverage (New York Times, 11/23). For most of these beneficiaries, the increased costs are projected to be $250 annually or less (Gannett/Arizona Republic, 11/23).
Jim Mays, ARC vice president and lead author of the report, said, "Most [beneficiaries] are projected to get helped, and some will get helped more than others but in any single year we would expect one in four to spend more out of pocket under [the benefit] than they would have under the prior system" (Kaiser Family Foundation release, 11/22).
Kaiser Family Foundation President and CEO Drew Altman said, "This analysis shows that the prescription drug law will provide the most help to seniors with low incomes and very high drug bills, just as Congress intended." He added, "The question is whether the law they passed will meet seniors' expectations" (Corbett Dooren, Dow Jones Newswires, 11/22).
Tricia Neuman, a Kaiser Family Foundation vice president and director of its Medicare Policy Project, said, "Low-income subsidies will clearly make an enormous difference for many seniors struggling to pay for their prescriptions, but unfortunately, many are expected to go without this extra assistance" (New York Times, 11/23). She added, "This demonstrates the need for an all-out effort to help low-income people on Medicare get the assistance promised by the new law" (Kaiser Family Foundation release, 11/22).
Diane Rowland, Kaiser Family Foundation executive vice president and executive director of the Kaiser Commission on Medicaid and the Uninsured, said, "The law works as it was designed," noting that a separate issue is "whether [it] meets public expectations."
CMS "took the unusual step of sending reporters a four-page" response to the report, the AP/Globe reports (AP/Boston Globe, 11/23).
CMS Administrator Mark McClellan said that the study added to "a growing consensus that the Medicare drug benefit offers substantial out-of-pocket savings, especially to people with low incomes." He added, however, that the study does not take into account that many Medicare beneficiaries might receive drug assistance through an employer, public health insurance program or charity organization.
AARP Policy Director John Rother said that the new drug benefit "is a terrific opportunity for lower-income seniors, and it will be helpful to millions of others, but not every single person" (New York Times, 11/23).
Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare, said Monday during a briefing on the report, "There's no doubt the 83% figure is marvelous. But if you look at those who fall within the 28%, these are some complications in the distribution of the benefit" (Heil, CongressDaily, 11/22).
The report is available online. NPR's "Morning Edition" covered the report (Rovner, "Morning Edition," NPR, 11/23). The segment is available online in RealPlayer.