A new analysis of Medicare beneficiaries reveals that only half have prescription drug coverage all year—challenging the often-cited statistic that two-thirds have a drug benefit through supplemental plans. In a study supported by The Commonwealth Fund, University of Maryland School of Pharmacy professor Bruce Stuart and colleagues looked at coverage over a 12-month period and found that many beneficiaries are covered for only part of the year. The study also shows that despite health needs, beneficiaries with no coverage or only partial coverage fill fewer prescriptions than those with full-time coverage yet pay up to twice as much out of pocket for the drugs they purchase.
In a Commonwealth Fund issue brief, Prescription Drug Costs for Medicare Beneficiaries: Coverage and Health Status Matter, Stuart and coauthors ask two key questions: How many Medicare beneficiaries lack prescription drug coverage? Are those lacking a drug benefit going without needed care? In contrast to recent studies reporting that two-thirds of Medicare beneficiaries have some drug coverage, Stuart finds that just over half (52.7%) of beneficiaries were covered for drugs throughout 1996. More than a quarter (28.4%) had no coverage throughout the year. The rest—one of five beneficiaries, or more than 6 million people—were covered for only part of the year. Even among the most chronically ill beneficiaries, only about half (56%) had full-year coverage, placing a huge financial burden on those with partial or no coverage.
"The study reveals startlingly high rates of discontinuous coverage for prescriptions among Medicare beneficiaries," said Karen Davis, president of The Commonwealth Fund. "The high costs paid out of pocket for those without coverage all year or insured for only part of the year pose a barrier to receiving needed medications for beneficiaries with limited incomes."
While nine of every 10 Medicare beneficiaries have another public or private insurance plan to supplement their basic Medicare coverage, these plans do not always cover prescriptions. Stuart finds that beneficiaries without drug benefits fill a fourth fewer prescriptions than those with full-time coverage yet face higher out-of-pocket costs during the year. Medicare beneficiaries with continuous drug coverage spent less than half as much out of pocket annually on prescription medications than their counterparts without drug coverage. Beneficiaries in fair to poor health with no drug coverage spent an average of $732 out of pocket in 1996, more than twice the $318 spent by beneficiaries in similar health who had a drug benefit.
"Our research suggests that Medicare beneficiaries are finding it harder than ever to obtain reliable sources of insurance that pay for prescription drug costs," said Stuart. He also notes that some emerging trends are undermining existing drug coverage options. The study finds that employer-sponsored coverage is most likely to offer drug benefits, resulting in relatively stable drug coverage throughout the year. However, if employers continue scaling back on health insurance for retirees, then increasing numbers of Medicare beneficiaries will be without adequate coverage. An increasing number of Medicare HMOs, moreover, are dropping drug benefits, lowering payment caps, increasing copayments, or raising premiums. These trends point to the need for improved coverage of prescription drugs in the basic Medicare program.
