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Study Finds That Medicare’s Drug Benefit Greatly Increased Seniors’ Coverage; Some Continue To Be Vulnerable To High Costs

Analysis Of Survey Of 16,000 Seniors Finds Those In Medicare Part D Plans Fare Better Than Those Without Drug Coverage, But Not As Well As Those Getting Drugs Via Employer Plans Or The VA

BETHESDA, MD -- The share of seniors without drug coverage dropped significantly under Medicare’s new drug benefit, according to a Health Affairs Web Exclusive article based on a Kaiser Family Foundation (KFF), Commonwealth Fund, and Tufts-New England Medical Center survey of more than 16,000 seniors. http://content.healthaffairs.org/cgi/content/full/hlthaff.26.5.w630

Seniors with drug coverage from any source were less likely to face high monthly drug costs or to skip prescribed medications because of cost than were seniors who remained without drug coverage. However, seniors who enrolled in a Medicare Part D plan did not fare as well as those who relied on other sources of drug coverage, such as employer-sponsored coverage or benefits from the Department of Veterans Affairs (VA).

The random-sample survey of more than 16,000 seniors nationally provides an in-depth look at how the Medicare drug benefit affected seniors. Conducted in fall 2006 by the KFF, Commonwealth Fund, and Tufts-New England Medical Center, the survey provides a comprehensive look at seniors’ out-of-pocket spending and cost-related experiences, broken out by type of drug coverage, with a more in-depth look at the experiences of seniors with low incomes.

“The Medicare drug law achieved its primary goal of providing drug coverage to most seniors who previously lacked it,” said KFF president and CEO Drew E. Altman. “But the survey found a significant number of seniors in Part D plans paying sizable amounts out-of-pocket for their medications and delaying or not filling their prescriptions for cost reasons.”

As Congress considers potential changes to the drug benefit’s low-income subsidy (LIS) provisions, the new study also highlights the major financial protections that the subsidies provided to those who received them. But among low-income seniors not receiving those subsidies, nearly one in three reported that they spent at least $100 per month for their prescriptions -- and others studies have estimated that there are 3.4 million to 4.7 million beneficiaries who are eligible for LIS but not receiving that extra help. Also, many low-income seniors who were not receiving LIS said that they were unaware of such assistance.

“In addition to covering more seniors, it’s important that coverage be adequate to ensure financial protection and access to prescription drugs,” said Commonwealth Fund president Karen Davis. “We still have a lot of work to do to make sure that Medicare beneficiaries -- particularly those who are most vulnerable because of low incomes or chronic illness -- can get the drugs they need and are not subject to burdensome out-of-pocket costs.”

Key findings include the following:

-- In 2006, 8.5 percent of seniors lacked drug coverage -- compared to about 33 percent of seniors without drug coverage in 2005, before Medicare Part D was enacted.

-- Those who lacked drug coverage in 2006 fell into two groups: those who are potentially vulnerable but hard to reach -- that is, age seventy-five or older, African American, income below 150 percent of the federal poverty level, no education beyond high school, or rural residence -- and seniors in good health, including those who did not take any prescription drugs and those with no chronic conditions.

-- Overall, half of all seniors received benefits through a new Medicare Part D drug plan -- either a Medicare Advantage or a stand-alone plan. The majority of part D enrollees (60 percent) had drug coverage previously from another source such as Medicaid or a Medicare Advantage plan. Nearly one-third (31 percent) of seniors received drug coverage through an employer plan, and about 3 percent received it through the VA.

-- One in four seniors in a Part D plan (26 percent) reported spending at least $100 per month. In addition, 8 percent of seniors in a Medicare Part D plan spent at least $300 per month on their medications -- a share smaller than that for seniors without any drug coverage (11 percent) but larger than for seniors with employer or VA coverage (5 percent in each group). This may be because employer plans typically do not have a gap in coverage, unlike most Medicare drug plans, and because VA coverage has relatively low cost-sharing requirements.

-- One in five seniors in a Part D plan (20 percent) reported that they had not filled, or delayed filling, a prescription due to costs during the past twelve months. Part D enrollees had slightly lower rates of cost-related skipping than seniors without any drug coverage (23 percent), and substantially higher rates than seniors getting prescriptions from an employer plan (8 percent) or the VA (12 percent).

Experiences Of Low-Income Seniors

The survey highlights the positive effects of the Medicare Part D LIS program that was designed to provide additional help to beneficiaries with limited financial resources. These additional subsidies limited out-of-pocket spending among low-income seniors who received them: A smaller share of low-income Part D enrollees receiving LIS spent more than $100 per month on their drugs (7 percent of seniors also receiving Medicaid benefits and 11 percent of other low-income seniors) than low-income Part D enrollees who did not receive LIS (32 percent).

The survey findings also indicate that lower-than-expected participation rates may be at least partly attributable to lack of awareness among low-income beneficiaries. Among low-income seniors who were not receiving the extra subsidies, just over half (52 percent) said that they were aware of the LIS program. Even among low-income enrollees enrolled in Part D plans but not receiving the subsidy, only 53 percent said that they were aware of the low-income assistance benefits.

“Low-income subsidies really make a difference for those seniors who receive them, but there are still millions of low-income seniors who are eligible for this help but not getting it,” said study lead author Tricia Neuman, Sc.D., a KFF vice president and director of the foundation’s Medicare Policy Project. “Our study confirms the importance of doing more to get additional assistance to low-income seniors.”

Dually Eligible Seniors

Dually eligible seniors (receiving both Medicare and Medicaid) were assigned by the government to a Part D plan to receive Medicare drug benefits at the start of 2006. The study found that they faced some of the biggest challenges in the transition to Medicare Part D.

Among the dual eligibles, one in five reported that they had been required to obtain special permission to fill one of their prescriptions during the previous year -- the highest rate among any group. They were also more likely than others to say that they had switched Medicare Part D plans since the start of the year.

ABOUT HEALTH AFFAIRS:

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.

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©2007 Project HOPE–The People-to-People Health Foundation, Inc.