Drug Coverage for Medicare Beneficiaries: Why Protection May Be in Jeopardy

Following a period of growth over the last decade, trends suggest that Medicare beneficiaries' access to affordable prescription drug benefits has begun to decline. Since the late 1990s, the engines that had been driving that growth—employer health plans and Medicare HMOs—have been offering increasingly less generous benefits to fewer people. There is no evidence that the private market or current public programs can reverse this decline in the coming years. This analysis evaluates trends in prescription drug coverage for Medicare beneficiaries during the 1990s as a way to project their future coverage, costs, and needs. Projections are based on data from 1993 to 1998, the most recent year for which published data are available. The results indicate that beneficiary drug coverage peaked in that year, or shortly thereafter, and has been in decline ever since. Even while coverage was expanding, beneficiaries' spending on prescriptions was on the rise: the elderly with drug benefits spent 35 percent more out-of-pocket in 1998 than they did in 1993. The prescription coverage outlook for Medicare beneficiaries will most likely further deteriorate without concerted and timely government action. If access to affordable drug benefits is not greatly expanded, elderly Americans—most of whom already make do on modest or low incomes—will find it even more difficult to obtain the medications they need.