Drug bills inadequate

July 1, 1993

If you are a senior citizen and thought Congress would give you some solid help with exorbitant prescription drug costs, think again.

A new report from the Commonwealth Fund, titled “Caught in Between: Prescription Drug Coverage of Medicare Beneficiaries Near Poverty,” says out-of-pocket costs for a couple at 160 percent of poverty would be pared only slightly.

“Both the House and Senate drug bills fall short in the help they provide to needy beneficiaries,” said Karen Davis, president of The Commonwealth Fund. “Most of the analyses today have focused on an individual beneficiary, but for an elderly couple trying to get along on a very modest income, high drug costs can be devastating. The bills now being debated in Congress still will burden many of these couples with large shares of their incomes devoted to paying for drugs,” she said.

Elderly living on $10,000 to $20,000 a year are less likely to have prescription drug coverage and so spend more for medicines. Many in this group would see limited benefit from current bills because premium aid starts phasing out for those above 130 percent of poverty.

Subsidies would be gone entirely for those with incomes above 160 percent of poverty. The Senate bill would do a bit better by those at 130 percent of poverty, but does not provide coverage to Medicaid beneficiaries. It leaves those costs to be covered by the states.

In 2006, it is estimated a couple at the 130th percentile ($17,017) with no drug coverage, would spend one-fifth of their income on drugs. Under the House bill their costs would be cut to 4.1 percent of their income and under the Senate bill to 3.4 percent.

A couple living on $20,944 (160 percent of poverty) would pay 11.6 percent of their income, or $2,437, under the House bill for their prescriptions, and $3,208 or 15.3 percent under the Senate bill.

The $10,000 to $20,000 bracket includes about 10.2 million elderly and disabled Medicare beneficiaries. They spend more out-of-pocket on medications than other groups, even though their total drug spending is lower on average.

More than a quarter of them (27 percent) spent 5 percent or more of their incomes on out-of-pocket drug costs in 1999, and nearly one in eight (12 percent) spent 10 percent or more on such expenses.

For the near-poor, out-of-pocket drug costs jumped 37 percent between 1993 and 1999. More than other income groups they depend on Medicare + Choice plans for their drug coverage. This source has been unstable in recent years because of plan withdrawals, rising cost-sharing and shrinking benefits.

More information on these findings is available at www.cmwf.org

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