Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Medicare Beneficiaries

04/01/2000

The percentage of Medicare beneficiaries with drug coverage for at least one month of the year increased from 57 percent in 1992 to 69 percent in 1996.48 Within the most recent two years for which we have data, the share of beneficiaries with prescription drug coverage for at least part of the year grew from 65 percent in 1995 to 69 percent in 1996, largely because of rapid growth in Medicare HMO enrollment during 1996.

Data for more recent years are not yet available.49 However, as William Scanlon of the General Accounting Office (GAO) and Lisa Alecxih of the Lewin Group recently testified before the House Commerce Committee, there are reasons to believe that coverage rates will erode in the future, if they have not already.50

  • Employers are continuing to cut back retiree benefits or requiring enrollees to pay much or all of the cost. Most of the changes affect current workers retiring after a given future date, not current retirees. It is likely that fewer new beneficiaries will have access to this source of drug coverage in coming years. However, given different effective dates of changes in retiree coverage, it is difficult to predict accurately how rapidly coverage might decline.
  • Some Medicare HMOs have been reducing their drug benefits. If all 1999 enrollees remained in the same plans in 2000, the number with drug coverage as part of the basic package would drop from 84 percent to 82 percent. This figure does not include enrollees whose plans have terminated their contracts and who may not be able to find drug coverage elsewhere. Continuing growth in the cost of drugs may cause further reductions in drug benefits in the future. It could also increase the premiums charged for thSome Medicare HMOs have been reducing their drug benefits. If all 1999 enr
  • In addition to these factors that may lead to a declining rate of coverage in future years, other factors (discussed above) may make the coverage that remains less complete. There is considerable evidence that cost sharing for prescription drugs is increasing and that overall caps on coverage are both becoming more common and are being set at lower levels (especially for Medicare+Choice plans).

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