PRESIDENT CLINTON HIGHLIGHTS HIS PLAN TO
STRENGTHEN AND MODERNIZE MEDICARE
FOR THE 21st CENTURY
Releases New Report That Documents That Three Out of Four Medicare
Beneficiaries Lack Decent, Dependable, Private-Sector Coverage
of Prescription Drugs
July 22, 1999
Today, the President met with community representatives in Lansing,
Michigan to discuss the future of the Medicare program. At this
meeting, he released a new report entitled, "Disturbing Truths and
Dangerous Trends: The Facts About Medicare Beneficiaries and
Prescription Drug Coverage," which describes the inadequate and
unstable nature of the prescription drug coverage currently available to
Medicare beneficiaries. The President also underscored the importance
of seizing this historic opportunity to strengthen and modernize the
Medicare program by making it more competitive and efficient;
modernizing and reforming its benefits, including the provision of a
long-overdue prescription drug benefit; and making an unprecedented
long-term financing commitment to Medicare that would secure Medicare's
financing for the next quarter century. Today, the President:
UNVEILED NEW REPORT DOCUMENTING THE DANGEROUS TRENDS IN PRESCRIPTION
DRUG COVERAGE FOR MEDICARE BENEFICIARIES. Prescription drugs have never
been more important, but the people who rely on them most -- the elderly
and people with disabilities -- increasingly find themselves uninsured
or with coverage that is becoming more expensive and less meaningful.
Today's report documents that the cost of purchasing essential
prescription drugs is not only a problem for the millions of Medicare
beneficiaries without any insurance, but is also an increasing challenge
for beneficiaries who have coverage. Key findings of the report
THREE OUT OF FOUR MEDICARE BENEFICIARIES LACK decent, dependable,
private-sector coverage of prescription drugs.
Only one-fourth of Medicare beneficiaries has retiree drug
coverage, which is the only meaningful form of private coverage.
Over three-fourths of beneficiaries have no coverage, inadequate
Medigap coverage or public coverage for prescription drugs. At least
one-third of Medicare beneficiaries have no drug coverage at all.
Another 8 percent purchase Medigap with drug coverage -- but this
coverage is frequently expensive, inaccessible and inadequate for many
Medicare beneficiaries. About 17 percent have coverage through Medicare
managed care. Given the projected leveling off of managed care
enrollment and actual declines in the scope of managed care drug
benefits, this source of coverage is unstable. Drug coverage in managed
care can only be assured if it becomes part of Medicare's basic benefits
and is explicitly paid for in managed care rates. Medicaid picks up
12 percent of the lowest income and sickest beneficiaries. The
remaining 5 percent are in Veterans' and other public programs.
PRIVATE TRENDS: DECLINE IN COVERAGE AND AFFORDABILITY.
Firms offering retiree health coverage have declined by 25 percent
in the last four years. Retiree health coverage is declining
substantially because many firms previously providing it are opting to
drop their coverage. The decline was more pronounced among the largest
employers (greater than 5,000 employees), over a third of whom dropped
coverage in this period.
Medigap premiums for drugs are high and increase with age. Medigap
premiums vary widely throughout the nation but are consistently two to
three times higher than the Medicare premium proposed by the President.
Moreover, unlike the President's proposal, premiums substantially
increase with age as virtually every Medigap plan "age rates" the cost
of the premium. This means that just as beneficiaries need prescription
drug coverage most and are the least likely to be able to afford it,
this drug coverage is being priced out of reach. This will
particularly affect women, who make up 73 percent of people over age 85.
PUBLIC DRUG COVERAGE TRENDS: MANAGED CARE BENEFITS REDUCED.
The value of Medicare managed care drug benefits is declining.
Nearly three-fifths of plans are reporting that they will cap
prescription drug benefits below $1,000 in the year 2000. This is part
of a troubling trend of plans to severely limit benefits through low
caps. In fact, the proportion of plans with $500 or lower benefit caps
will increase by over 50 percent between 1998 and 2000.
Participation by Medicaid eligible populations remains low.
Millions of Medicare beneficiaries under 75 percent of poverty (about
$6,000 for a single, $8,500 for a couple) are eligible for Medicaid
prescription drug coverage, but the participation rate is only 40
percent. This contrasts with an almost 100 percent participation rate
in Medicare Part B. Inadequate outreach and welfare stigma contributes
to these low participation levels and raise serious questions about the
feasibility and advisability of using the Medicaid program to provide
needed coverage for a population at higher income levels.
MILLIONS OF BENEFICIARIES HAVE NO DRUG COVERAGE.
At least 13 million Medicare beneficiaries have absolutely no
prescription drug coverage. The number of the uninsured is not
concentrated among the low income. In fact, the income distribution of
uninsured Medicare beneficiaries is almost exactly the same for
beneficiaries at all income levels.
More than half of Medicare beneficiaries without drug coverage are
middle class. Over 50 percent of Medicare beneficiaries without drug
coverage have incomes in excess of 150 percent -- an annual income of
approximately $17,000 for couples. This clearly indicates that any
prescription drug coverage policy that limits coverage to below 150
percent of poverty, as some in Congress suggest, will leave the vast
majority of the Medicare population unprotected.
PRESCRIPTION DRUG COVERAGE IS GOOD MEDICINE.
Part of modern medicine. Prescription drugs serve as complements
to medical procedures, such as anti-coagulants, used with heart valve
replacement surgery; substitutes for surgery, such as lipid lowering
drugs that reduce the need for bypass surgery; and new treatments where
there previously were none, such as medications used to manage
Parkinson's disease. In addition, as our understanding of genetics
grows, the possibility for breakthrough pharmaceutical and biotechnology
will increase exponentially.
Medicare beneficiaries are particularly reliant on prescription
drugs. Not only do the elderly and people with disabilities have more
problems with their health, but these problems tend to include
conditions that respond to drug therapy. Not surprisingly, about 85
percent of beneficiaries fill at least one prescription a year for such
conditions as osteoporosis, hypertension, myocardial infarction (heart
attacks), diabetes, and depression.
The lack of drug coverage has led to inappropriate use of
medications which can result in increased costs and unnecessary
institutionalization. Recent research has determined that being
uninsured leads to significant declines in the use of necessary
medications. The consequence of inappropriate and underutilization of
prescription drugs has also been found to double the likelihood that
low-income beneficiaries entering nursing homes. One study concluded
that drug-related hospitalization accounted for 6.4 percent of all
admissions of the over 65 population and estimated that over
three-fourths of these admissions could have been avoided with proper
use of necessary medications.