PRESIDENT CLINTON RELEASES NEW REPORT ON THE SPECIAL CHALLENGES FACING
RURAL SENIORS WHO NEED PRESCRIPTION DRUGS
Today, the President will release a new report from the Domestic Policy
Council and the National Economic Council documenting the special
challenges that the over 9 million Medicare beneficiaries in rural
communities who are trying to get and afford life-saving prescription
drugs. This report, prepared in response to a request from Senator Max
Baucus (D-MT), shows that rural beneficiaries tend to have a greater
need for prescription drug coverage but have fewer coverage options.
Their incomes are lower, access to pharmacies is more limited, and
out-of-pocket spending higher. The report will highlight that the
private prescription drug coverage options available to rural
beneficiaries are not only severely limited, but extremely expensive.
The President will stress that it makes little sense to build on flawed
private options like Medigap, the approach being advocated by the House
Republicans today. Instead, he will urge Republicans to work with him
to design a meaningful Medicare prescription drug benefit that provides
an affordable, dependable, coverage option available to all
RURAL BENEFICIARIES HAVE A GREATER NEED FOR PRESCRIPTION DRUG COVERAGE.
Rural Medicare beneficiaries, who represent nearly one-fourth of the
Medicare population, have lower incomes, more limited access to
pharmacies, and higher out-of-pocket expenditures than their urban
counterparts. Key findings of the report the President is releasing
Rural beneficiaries pay more for prescription drugs than urban
beneficiaries, and are more likely to go without needed medication
because of cost concerns. Rural beneficiaries are over 60 percent more
likely to go without prescription medication because of cost concerns
than urban beneficiaries. In addition, because rural beneficiaries pay
over 25 percent more out-of-pocket for prescription drugs than urban
beneficiaries, they spend on average a greater percentage of their
income for these medications.
Rural elderly are more likely to have high out-of-pocket spending
than urban seniors, even among the chronically ill. About one-third of
rural seniors versus 25 percent of urban beneficiaries have
out-of-pocket spending that exceeds $500. This difference persists even
when looking only at older Americans with heart disease, hypertension,
stroke and cancer, about 45 percent of these rural seniors have
out-of-pocket spending exceeding $500 compared to 36 percent of
chronically ill urban seniors.
Rural Medicare beneficiaries are 50 percent less likely to have any
prescription drug coverage. The proportion of rural beneficiaries who
lack drug coverage for the entire year is 43 percent compared to 27
percent in urban areas. This lack of coverage is even more dramatic
when looking those who are uninsured for part of the year. About 57
percent of rural Medicare beneficiaries do not have prescription drug
coverage for all or part of the year, compared to 44 percent of urban
beneficiaries. In addition, the oldest rural seniors are particularly
likely to lack prescription drug coverage. Over half of rural seniors
age 85 or older have no drug coverage --more than 50 percent higher than
urban seniors that age.
In rural America, most beneficiaries who lack prescription drug
coverage are middle income. Although rural seniors have lower incomes
than urban seniors, about 45 percent of those without prescription drug
coverage have incomes between 150 and 400 percent of poverty. They
would not qualify for direct premium assistance in plans that subsidize
loe income beneficiaries but do not have enough income to afford private
Rural beneficiaries are about one-third less likely to have retiree
health insurance. Only about one in four of rural seniors have drug
coverage through employer-based retiree insurance, compared to 35
percent of urban seniors.
Less than 1 percent of rural beneficiaries are enrolled in Medicare
managed care with a prescription drug benefit. About 75 percent of
rural beneficiaries do not have a managed care option, and no state has
more than 30 percent of rural beneficiaries enrolled in managed care.
Only one-third of rural managed care enrollees have a drug benefit in
their basic benefit, and of those with drug coverage, nearly two-thirds
have coverage limit of $1,000 or less for brand name and/or generic
Due to lack of alternatives and the critical need for drug
coverage, rural seniors disproportionately purchase Medigap. About 13
percent of rural Medicare beneficiaries receive prescription drug
coverage through Medigap compared to 11 percent of urban beneficiaries.
Premiums for Medigap for rural beneficiaries are high and increase
with age. A typical 65-year old pays about $164 per month for a Medigap
plan that includes limited prescription drug coverage. In Montana, the
typical monthly premium for a Medigap plan with prescription drugs is
$126 if you are age 65, but $184 if you are age 80 or older. On top of
these high premiums, rural seniors with Medigap spend on average $442
out-of-pocket for drug costs -- 75 percent more than rural beneficiaries
with retiree health coverage.
CONGRESS SHOULD WORK IN A BIPARTISAN FASHION TO DRAFT A MEANINGFUL
MEDICARE DRUG BENEFIT. The President will call on the Congress to work
together on a plan that is designed to cover people -- not provide
political cover. He will raise concerns about the Republican proposal
that would use a flawed Medigap-like model that would not work for all
THE PRESIDENT'S PLAN EXTENDS PRESCRIPTION DRUGS TO ALL MEDICARE
BENEFICIARIES. The President's plan provides an affordable, accessible,
prescription drug benefit option to all beneficiaries. It is:
Voluntary. Medicare beneficiaries who now have dependable,
affordable coverage would have the option of keeping that coverage.
Accessible to all beneficiaries. Beneficiaries who join the
program would pay the same premium and get the same benefit, no matter
where they live, through a private, competitively selected benefit
manager or, where available, through managed care plans.
Designed to give beneficiaries meaningful protection and bargaining
power. A reserve fund in the President's budget helps Medicare
beneficiaries with catastrophic prescription drug costs. The plan also
gives beneficiaries bargaining power they now lack by utilizing private
prescription drug managers to negotiate discounts that can be extracted
from volume purchasing.
Affordable to all beneficiaries and the program. According to CBO,
premiums would be $26 per month in 2003. Low-income beneficiaries --
below 150 percent of poverty ($17,000 for a couple) -- would receive
extra help with the cost of premiums; those below 135 percent would have
no cost sharing.
Consistent with broader reform. The new, voluntary prescription
drug benefit is part of a larger plan to strengthen and modernize
Medicare. This plan would make Medicare more competitive and efficient,
reduce fraud and out-year cost increases, promote fair payments, and
improve preventive benefits in Medicare.