Medicare Part D Fills Prescription Drug Gaps, Study Shows

Medicare's prescription drug benefit has dramatically reduced the number of seniors without prescription drug coverage, according to a new study on the Health Affairs Web site. However, the extent of coverage provided by the Medicare drug benefit is not as comprehensive as coverage provided by private insurance plans or the Veterans Administration, says the study.

In 2005, one-third of seniors -- individuals 65 and older -- said they had no drug coverage, but after enactment of the Medicare Prescription Drug Improvement and Modernization Act, or Medicare Part D, prescription drug benefit in 2006, the percentage of seniors without drug coverage dropped to 20 percent, according to the "Medicare Prescription Drug Benefit Report," a study by the Kaiser Family Foundation that was supported by Tufts-New England Medical Center and the Commonwealth Fund.

"The take-away message is the new Medicare drug benefit has helped a lot of seniors," says Stuart Guterman, senior program director for the Program on Medicare's Future at the Commonwealth Fund. "But it still needs more work to make sure that it reaches all of the people that it could help, and to better protect the people who are enrolled."

Medicare covers about 44 million people in the United States, 35 million seniors and 9 million disabled beneficiaries, according to Guterman. In 2006, half of all seniors received benefits through a new Medicare Part D plan -- a Medicare Advantage Plan or a stand-alone Medicare plan -- according to the study. Nearly 31 percent, meanwhile, had prescription drug coverage through their employers, and an additional 3 percent were covered by the VA.

The study, which is based on a random-sample survey of more than 16,000 seniors nationwide in the fall of 2006, found that 26 percent of seniors covered under Medicare Part D spent $100 or more a month on out-of-pocket drug costs with 8 percent spending $300 or more a month. By comparison, five percent of seniors with either private insurance or VA coverage spent $300 or more a month on out-of-pocket drug costs.

At the same time, one in five seniors (20 percent) in a Medicare drug plan did not fill or delayed filling a prescription because of costs, compared to 8 percent of seniors enrolled in private plans and 12 percent in VA plans. The higher Medicare costs could be a result of Part D coverage gaps or the so-called "doughnut hole," as well as price tiering that many plans use to make more expensive drugs less accessible, according to Guterman.

"For beneficiaries with chronic conditions, out-of-pocket costs can be a major expense," he says.

The study concludes that seniors without any drug coverage probably fall into two broad groups: hard-to-reach, low-income seniors and beneficiaries who are considered relatively healthy because they are not suffering from chronic conditions and are not taking prescription medicines.

Hard-to-reach groups tend to be elderly, low-income African-Americans who live in rural areas, making it difficult for Medicare and other programs to reach them. The relatively healthy group "may not expect to run into medical expenses, and may not consider Medicare Part D worth the cost," says Guterman.

The Medicare Part D prescription drug benefit provides a low-income subsidy for seniors with incomes below 150 percent of the federal poverty level, and it has, in turn, substantially reduced out-of-pocket expenses for those who are enrolled, making it easier for them to fill their prescriptions without delays. Yet, many who might quality for the subsidy do not apply because they don't know about it, according to Guterman.

"There is a tendency to view Part D as mission accomplished," Guterman says. "I think it is important to understand that this is going to take a continued effort to try and reach the folks who are harder to reach, particularly the low-income folks, and to improve the protection the benefit offers to all seniors."