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Gap in Seniors’ Drug Coverage Exceeds Earlier Estimates

Originally published by Reuters Health, February 27, 2002

NEW YORK (Reuters Health) — The proportion of Medicare beneficiaries who had no prescription drug coverage in the fall of 1999 is much higher than originally thought, a new study shows.

More than one in three lacked coverage for medications at that point in time, according to researchers with the Barents Group of KPMG Consulting Inc. and the Henry J. Kaiser Family Foundation. That far exceeds previous estimates measuring beneficiaries’ drug coverage at any time during the calendar year, they reported.

“A large share of seniors lack drug coverage, many lack drug coverage throughout the year … so there are many who are at risk and face high out-of-pocket costs, and many have difficulty getting the drugs they need,” said Tricia Neuman, a vice president and director of the Kaiser Family Foundation’s Medicare Policy Project.

“It certainly speaks to the urgency … of the national debate” over the creation of a Medicare drug benefit, she said.

The analysis of trends in Medicare supplemental insurance and prescription drug coverage appears in Wednesday’s online issue of the health policy journal Health Affairs. It is based on 1996 to 1999 “Access to Care” data from the Medicare Current Beneficiary Survey.

Although most beneficiaries had some supplemental insurance coverage in the fall of 1999, nearly 38% reported having no drug benefits at the time. That contrasts with previously-published national estimates from 1998 showing that 27% of all beneficiaries lacked drug coverage at some time during the year.

“The primary reason for the difference most likely arises from gaps in drug coverage for a share of beneficiaries during the year,” the research team explained.

The fall 1999 snapshot also identified several groups of beneficiaries who were most likely to lack drug coverage during the period. They include people who live in rural areas (50%), seniors age 85 and older (45%), and the “near-poor” (44%).

Of beneficiaries who indicated that they had drug coverage in the fall of 1999, most were covered through an employer-sponsored plan or Medicare HMO. A mere 7% were covered through a Medigap policy. Eighty-eight percent of those with employer-sponsored insurance and 83% of Medicare HMO enrollees had drug benefits in 1999, versus 27% who has a Medigap policy.

“What happened between 1996 and 1999 is that Medicare HMOs really stepped up to the plate and provided drug coverage for seniors who were losing drug coverage through Medigap,” Neuman observed.

Since 1999, however, things have changed. Many HMOs have dropped out of Medicare or reduced their service areas. Medigap premiums have continued to climb, with the sharpest percentage increases among plans offering limited drug coverage. And the outlook for retiree health coverage grows dimmer as more employers cut back coverage.

“These trends raise major concerns about where seniors will turn for their drug coverage,” Neuman told Reuters Health. “There are fewer options available to people now in 2002 than there were in 1999,” she said.