|
AARP’s Policy on Prescription Drugs in
Medicare
Medicare does not typically cover the cost of prescription
drugs dispensed in an outpatient setting. As a result, Medicare
beneficiaries spend more out of pocket for prescription drugs, on
average, than they do for hospital care, physician services or other
health care goods and services. In 2000 Medicare beneficiaries spent
an estimated $480, on average, in out-of-pocket costs for
prescription drugs. High out-of-pocket prescription drug spending is
not merely a problem for lower-income beneficiaries. Those with high
out-of-pocket drug spending (exceeding $500 in 1999) are neither
disproportionately low income nor high income. More than 70 percent
of beneficiaries who lack drug coverage have income exceeding 175
percent of the federal poverty level; more than 50 percent of
beneficiaries who lack drug coverage have incomes exceeding 250
percent of the federal poverty level. In 2001, the federal poverty
level for a family of four was $17,650; for a single person it was
$8,590.
While about two-thirds of Medicare beneficiaries have some form
of supplemental coverage for prescription drugs, 40 percent or more
lack coverage at some point during the year. Furthermore,
supplemental coverage can be expensive and does not always protect
beneficiaries from high out-of-pocket drug costs. Of the estimated
25 percent of beneficiaries who spent more than $500 out of pocket
for prescription drugs in 1999, more than half had some form of drug
coverage. This can be explained in part by differences in
supplemental coverage among Medicare beneficiaries. For example,
beneficiaries who have employer-provided or HMO coverage often have
lower than average out-of-pocket drug costs, in part because of the
generosity of many of those plans. However, beneficiaries who have
drug coverage through private Medigap plans– which have $250
deductibles, 50 percent coinsurance and benefit caps- have
substantially higher average out-of-pocket drug costs.
In addition, current prescription drug coverage may not be stable
or dependable. Medicare+Choice plans can change their benefits or
even withdraw from the program on an annual basis.
Employer-sponsored prescription drug coverage is becoming less
generous and less common. And annual increases in Medigap premium
costs are making those policies less and less affordable.
The lack of a Medicare prescription drug benefit can have adverse
effects on both quality of care and costs of treatment. Some
beneficiaries forgo prescription drug treatment or use less than the
fully prescribed dosage because they are unable to afford the price
of their drugs. To the extent that the lack of treatment or
incorrect dosage worsens beneficiaries’ medical condition and
requires further care, higher Medicare costs for some treatments
could result. Evidence from the Medicaid program suggests that lack
of access to prescription drugs can increase other health care costs
for the elderly. Although the magnitude of the impacts for Medicare
is uncertain, health care analysts are increasingly able to show how
certain prescription drug treatments improve health outcomes and in
some cases, reduce other drug costs.
Medicare’s benefit package should assure access to the most
effective medical treatments and therefore should include
prescription drug coverage available to all beneficiaries, without
regard to their income, geographic location, health status or choice
of Medicare plan. While AARP recognizes that the Medicare program
requires some additional reforms, it supports the provision of
prescription drug coverage that meets our Medicare principles, even
in the absence of such reforms.
AARP POLICY
AARP believes that Medicare should provide a prescription drug
benefit to all beneficiaries that:
- Is available to all beneficiaries, without regard to income,
geographic location or health status;
- Is available without regard to a beneficiary’s choice of
Medicare plan, including original Medicare;
- Is voluntary, so that beneficiaries can choose between keeping
their existing drug coverage or enrolling in the Medicare drug
benefit;
- Minimizes incentive for employers to drop prescription drug
coverage for the insured retirees;
- Is part of a defined benefit package, so that prescription
drug benefits are guaranteed over time and beneficiaries
understand what is included in their benefit;
- Includes a government contribution that minimizes risk
selection through an affordable beneficiary premium and a benefit
design attractive to all beneficiaries;
- Ensures that each beneficiary has access to drug therapies
that his or her physician determines to be medically appropriate
and necessary;
- Provides additional subsidies for low-income beneficiaries to
protect them form unaffordable costs and ensure that they have
access to the benefit;
- Uses Medicare’s aggregate purchasing power to obtain discounts
and/or rebates from drug manufacturers and pharmacies;
- Relies on stable, broadly based and equitable financing; and
- Protects Medicare beneficiaries from exorbitant costs.
- Include quality improvement components to reduce medical error
and to encourage appropriate prescribing, monitoring and use of
medications.
Top
of Page
|
|
|
|