Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Characteristics of Individuals with and Without Coverage

04/01/2000

Table 1-3 shows drug coverage rates for beneficiaries with coverage for at least one month in 1996 by income as a percent of the federal poverty threshold (in 1996 the threshold was $7,525 for an individual and $9,491 for a couple age 65 or older).40 Coverage is lowest for beneficiaries between 100 and 150 percent of poverty. These beneficiaries may not qualify for Medicaid or may be eligible only for limited QMB/SLMB benefits, and they may be unable to afford to purchase coverage on their own. Above this level, coverage rises fairly steadily with income, although about 23 percent of Medicare beneficiaries with incomes above 400 percent of poverty had no drug coverage at any time in 1996 (see Figure 1-3).

Income as percent of poverty With drug coverage
(000s)
Without drug coverage
(000s)
Percent without drug coverage
Table 1-3. Medicare Beneficiaries with and without Prescription Drug Coverage, For at Least One Month, by Income, 1996
<100% 5,498 2,619 32.3%
100-135% 2,829 1,795 38.8%
136-150% 1,020 676 39.8%
151-175% 1,708 926 35.2%
176-200% 1,812 995 35.5%
201-300% 5,178 2,226 30.1%
301-400% 3,094 1,031 25.0%
>400% 4,482 1,355 23.2%
Total 25,621 11,623 31.2%

Note: Not all differences in coverage rate by income groups are statistically significant. The differences between the groups with the highest rates of coverage and the groups with the lowest rates of coverage are statistically significant. The Federal poverty threshold for couples 65 and over in 1996 was $9491.

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Figure 1-3. Medicare Beneficiaries Who Never Had Drug Coverage During the Year, by Income, 1996

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Beneficiary Survey Cost and Use File, 1996


Table 1-4 shows the number of beneficiaries without coverage by income as a percent of all beneficiaries without coverage. The majority of beneficiaries without drug coverage in 1996, 56 percent, had incomes above 150 percent of poverty and 40% had incomes above 200 percent of poverty.

Income as percent of poverty Beneficiaries without drug coverage
(000s)
Percent of total without coverage
(000s)
Table 1-4. Medicare Beneficiaries Who Never Had Drug Coverage During the Year, by Income, as Percent of All Beneficiaries without Coverage, 1996
<100% 2,619 22.5%
100-150% 2,471 21.0%
151-200% 1921 16.5%
>200% 4612 40.0%
Total 11,623 100.0%

Note: The Federal poverty threshold for couples 65 and over in 1996 was $9491.

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Table 1-5 shows coverage rates for at least one month in 1996 by age. Disabled nonelderly beneficiaries are slightly more likely to have coverage than the elderly. More disabled beneficiaries may have incomes low enough to qualify for SSI and thus receive Medicaid; the disabled account for 12 percent of all beneficiaries but 34 percent of beneficiaries with Medicaid. On the other hand, they are less likely to have employer coverage or be enrolled in Medicare risk HMOs.

Among the elderly, rates of coverage drop steadily with age. There are a number of possible explanations. First, the very old tend to have lower incomes than younger elderly people and may not be able to afford Medigap—especially because Medigap premiums often rise with attained age. Second, retiree health benefits are a relatively recent phenomenon; the very old may be more likely than the younger elderly to have retired before such coverage became prevalent.

AGE With drug coverage
(000s)
Without drug coverage
(000s)
Percent without coverage
Table 1-5. Medicare Beneficiaries with and without Prescription Drug Coverage for at Least One Month, by Age, 1996
0-44 1,038 432 29.4%
45-64 2,093 781 27.2%
65-69 6,841 2,644 27.9%
70-74 6,025 2,658 30.6%
75-79 4,599 2,229 32.6%
80-84 2,964 1,640 35.6%
85+ 2,061 1,238 37.5%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Table 1-6 shows rates of coverage for at least one month in 1996 by sex. Males are slightly more likely to have coverage than females; as male beneficiaries tend to be younger than female beneficiaries, this finding is consistent with the age differences shown in Table 1-5. Also, males are more likely to have worked and have access to retiree insurance.

SEX With drug coverage
(000s)
Without drug coverage
(000s)
Percent without coverage
Table 1-6. Medicare Beneficiaries with and without Prescription Drug Coverage for at Least One Month, by Sex, 1996
Male 11,561 4,917 29.8%
Female 14,059 6,706 32.3%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Table 1-7 shows coverage for any part of 1996 by race. Differences in coverage rates by race are not statistically significant.

RACE With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Table 1-7. Medicare Beneficiaries with and without Prescription Drug Coverage for at Least One Month, by Race, 1996
White 21,804 10,176 31.8%
Black 2,397 1,016 29.8%
Other 1,420 431 23.3%

Note: “Other” includes Asian, Hispanic, and North American Native.

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Table 1-8 and Figure 1-4 show coverage for at least one month in 1996 according to whether the beneficiary resides in a metropolitan statistical area. Beneficiaries outside metropolitan areas have a much lower rate of coverage. While 57 percent of beneficiaries living in rural areas had coverage for at least one month in 1996, 73 percent of beneficiaries living in metropolitan areas had some drug coverage. Rural beneficiaries also had less full-year coverage; only 44 percent had coverage throughout the year.41 By contrast, 49 percent of beneficiaries living in urban areas had coverage for the full year. One factor is probably more limited availability of Medicare HMOs, which tend to be concentrated in metropolitan areas. HCFA(now known as CMS) projects that, in 2000, about 29 percent of beneficiaries live in areas with no access to a Medicare+Choice plan. In addition, nonmetropolitan beneficiaries are less likely to have employer-sponsored drug benefits, probably because their jobs were less likely to have offered retiree benefits.


Figure 1-4. Beneficiaries Who Never Had Drug Coverage During the Year, by Metropolitan Residence, 1996

Figure 1-4. Beneficiaries Who Never Had Drug Coverage During the Year, by Metropolitan Residence, 1996

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Beneficiary Survey Cost and Use File, 1996

Table 1-8. Medicare Beneficiaries with and without Prescription Drug Coverage for At Least One Month, by Metropolitan Residence, 1996
Residence With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Metropolitan 19,932 7,414 27.1%
Non-metropolitan 5,660 4,203 42.6%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Beneficiary Survey Cost and Use File, 1996

Table 1-9 and Figure 1-5 show coverage for at least one month in 1996 by self-reported health status. Differences in coverage rates by health status are not statistically significant. However, differences in source of coverage are significant: those reporting poor health are more likely to have coverage through Medicaid and less likely to have coverage from employers or HMOs.


Figure 1-5. Beneficiaries Who Never Had Drug Coverage During the Year, by Health Status, 1996

Figure 1-5. Beneficiaries Who Never Had Drug Coverage During the Year, by Health Status, 1996

Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Beneficiary Survey Cost and Use File, 1996


Health Status With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Table 1-9. Medicare Beneficiaries with and without Prescription Drug Coverage for at Least One Month, by Self-Reported Health Status, 1996
Excellent 4,186 1,967 32.0%
Very Good 6,742 3,193 32.1%
Good 7,693 3,468 31.1%
Fair 4,496 1,970 30.5%
Poor 2,451 1,000 29.0%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Additionally, unstable drug coverage was evident for individuals with self-reported poor health status. Almost 21 percent of individuals with fair to poor health status had only part-year coverage in 1996.42

However, self-reported health status is a subjective measure that may or may not be related to actual need for drugs or other health services. The next three tables use different measures as alternative indicators of a likely need for prescription drugs.

The first is functional status, which measures the extent to which an individual requires assistance in performing “activities of daily living” (ADLs), such as bathing, dressing, toileting, or eating, or with “instrumental activities of daily living” (IADLs), such as meal preparation or managing money. Prior analysis of MCBS data has shown that poorer functional status is strongly correlated with the need for acute care services.43 As Table 1-10 shows, drug coverage does not differ very much by functional status. The most severely disabled beneficiaries have about the same rate of coverage as those with no limitations.


Functional Status With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Table 1-10. Medicare Beneficiaries with and without Prescription Drug Coverage, by Functional Status, 1996
No limitations 19,592 8,949 31.4%
Requires assistance with:      
IADL only 1,130 458 28.8%
1 or 2 ADLs 2,979 1,384 31.7%
3 or more ADLs 1,920 832 30.2%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Table 1-11 shows coverage rates for any part of 1996 by the number of chronic conditions reported by a beneficiary from a list of ten possible conditions.44 Those reporting 5 or more chronic conditions had a somewhat higher coverage rate than those reporting fewer chronic conditions, and considerably higher than those reporting none. They were also more likely to have coverage through Medicaid or other public programs. Yet, many had gaps in their coverage. Of the more than 74 percent of these beneficiaries that had coverage for at least one month during the year, 21 percent only had coverage for part of the year.45

Chronic Conditions With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Table 1-11. Medicare Beneficiaries with and without Prescription Drug Coverage, by Number of Chronic Conditions, 1996
0 2,419 1,311 35.1%
1-2 11,255 5,383 32.4%
3-4 9,221 3,986 30.2%
5+ 2,727 943 25.7%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

Finally, table 1-12 shows coverage rates for any part of 1996 for beneficiaries who did and did not have an inpatient hospital admission during the year. The two groups had about the same rates of coverage.

Any inpatient admission With drug coverage (000s) Without drug coverage (000s) Percent without coverage
Table 1-12. Medicare Beneficiaries with and without Prescription Drug Coverage, by Use of Inpatient Hospital Services, 1996
No 21,118 9,522 31.1%
Yes 4,503 2,101 31.8%
Source: Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)): Medicare Current Beneficiary Survey Cost and Use File, 1996.

In sum, on three measures that might be related to need for services — self-reported health status, functional status, and inpatient hospital use — MCBS shows no statistically significant difference in drug coverage between healthier and sicker or more disabled individuals. These findings do not rule out the possibility of self-selection; within each defined subpopulation there are likely to be some individuals with a greater need for prescription drugs than others, and these individuals may be more prone to obtain insurance. Moreover, on one measure, number of chronic conditions, sicker individuals do have significantly higher rates of coverage. Evidence about utilization and spending related to the question of selection is reviewed in Chapter 2. These findings, however, do suggest that healthy Medicare beneficiaries are not the only ones who lack coverage for prescription drugs. In general, an equal proportion of covered and non-covered beneficiaries have health problems.

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