medicare’s future: current picture, trends, and medicare prescription drug improvement &...
TRANSCRIPT
Medicare’s Future: Current Picture, Trends, and Medicare
Prescription Drug Improvement & Modernization Act of 2003
Selected Charts
Barbara S. Cooper, Senior Program DirectorSabrina How, Program Assistant
The Commonwealth Fund
Updated February 24, 2004
2
Contents
• Trends in Medicare Expenditures
• Medicare Performance
• Characteristics of Medicare Beneficiaries
• Medicare Beneficiary Expenses Not Covered by Medicare
• Medicare Experience with Private Plans
• Prescription Drugs
• Medicare Prescription Drug Improvement & Modernization Act of 2003
• Selected Commonwealth FundMedicare Reports
3
Trends inMedicare Expenditures
4
National Health Expenditures by Source of Funds, 2002
Medicare
$267 billion
Private Health
Insurance
$550 billion
Out-of-pocket
$212 billion
Medicaid
$250 billion
Other public
$196 billion
Other private
$78 billion
Total National Health Expenditures = $1.6 trillion
Source: Katharine Levit et al., “Health Spending Rebound Continues in 2002,”Health Affairs (January/February 2004).
5%17%
16%
13%35%
14%
5
15.2%
17.2% 17.2%
10.5%
15.8%
0%
10%
20%
1970 1980 1990 2001 2002
Medicare Spending as a Percent ofTotal Health Expenditures, 1970–2001
Percent
Source: Katharine Levit et al., “Health Spending Rebound Continues in 2002,”Health Affairs (January/February 2004).
6
Number of Years Before HI Trust Fund Projected to Be Exhausted
23
28
28
25
16
10
4
5
7
7
6
10
14
13
17
15
10
13
7
7
5
10
14
13
12
4
2
2
0 5 10 15 20 25 30
2003
2001
1999
1997
1995
1993
1991
~
1987
1985
1983
1981
1979
~
1971
Source: Congressional Research Service 1995 and Annual Medicare Trustees Reports.
~ Missing Data for Years 1973–1977 and 1989.
7
Medicare Performance
8
• Medicare beneficiaries are less likely to report negative insurance experiences, including plan not covering care
• Medicare beneficiaries are less likely to report any access problems due to cost, including not getting needed specialist care
• Medicare beneficiaries are much more likely to report being very confident in their future ability to get care
• Even those most at risk, sick and poor Medicare beneficiaries, are more likely to rate their coverage as excellent
Source: Karen Davis et al., “Medicare Versus Private Insurance: Rhetoric and Reality.” Health Affairs Web Exclusive (October 2002).
Medicare Beneficiary Experience:Compared to Privately Insured Ages 19–64
9
32%
62%
43%
18%
51%61%
20% 22%
0%
40%
80%
Rated Health
Insurance as
Excellent
Reported
Negative Plan
Experiences
Went Without
Needed Care in
Past Year
Because of
Costs
Reported Being
Very Satisfied
with Care
Medicare, age 65+ Employer coverage, ages 19–64
Experiences with Insurance Plan and Satisfaction with Quality of Care, by Insurance Status
Source: Karen Davis et al., “Medicare Versus Private Insurance: Rhetoric and Reality.” Health Affairs Web Exclusive (October 2002).
10
26%
34%
43%
34%
22%16%
12%16%
0%
25%
50%
Lower income,
sick
Lower income,
healthy
Higher income,
sick
Higher income,
healthy
Medicare, age 65+ Employer coverage, ages 19–64
Predicted Rating of Health Insurance Coverage, by Health, Poverty and Insurance Status, 2001
Note: Sick:good/fair/poor health status with average number of chronic conditions for this group. Healthy: excellent/very good health status with average number of chronic conditions for this group. Models control for prescription drugs.
Percent rating coverage as “excellent”
Source: Karen Davis et al., “Medicare Versus Private Insurance: Rhetoric and Reality.” Health Affairs Web Exclusive (October 2002).
11
22%29%
40%
15%
36%
54%
0%
40%
80%
Rated Health
Insurance as
Excellent
Any Medical Bill
Problems
Very Confident in
Future Ability to Get
Quality Care
Medicare 65+ without prescription coverageMedicare 65+ with prescription coverage
Experiences with Insurance Plan and Satisfaction with Quality of Care, by Prescription Drug Coverage
Note: Model adjusted for poverty status, self-reported health status,and chronic conditions.
Source: The Commonwealth Fund 2001 Health Insurance Survey.
12Percent Annual Per Enrollee Growth inMedicare Spending and Private Health Insurance and
FEHBP Premiums for Common Benefits
9.1
6.2
10.1
8.79.6
10.7
0
2
4
6
8
10
12
1969–2002 1999–2002
Medicare Private Health Insurance FEHBPPercent
Source: Katharine Levit et al., “Health Spending Rebound Continues In 2002,”Health Affairs (January/February 2004).
13
Characteristics ofMedicare Beneficiaries
14Income as a Share of Poverty for Various Medicare Beneficiary Groups, Relative to
Poverty Level, 1999
41%
28%
17%
19%
4% 12%
12%
12%
12%
6%
9%
11%
10%
18%
26%
44%
41%
19%
19%
12%
13%
6%
5%
5%
Black and Other
Widowed, Single,and Divorced
Elderly
All Beneficiaries
<100% 100%–135% 135%–150% 150%–200% 200%–250% 250%+
Note: ASPE Definition, Insurance Unit excludes full-year facility beneficiaries.
Source: Marilyn Moon, Urban Institute analysis of 1999 MCBS.
15
Profile of Medicare Beneficiaries,by Poverty and Health Status
Two of Three Have Low Incomes or Health Problems*
32% in excellent/good health with income >200% of poverty
30% with health problemsand incomes <200%of poverty
26% in excellent/good health with income <200% of poverty
12% with health problemsand income >200% of poverty
* In fair or poor health or disabled, under-65.
Source: Cathy Schoen, et al., Medicare Beneficiaries: A Population At Risk,The Commonwealth Fund, December 1998. Based on the Kaiser/Commonwealth1997 Survey of Medicare Beneficiaries.
16Beneficiaries with Disabling Health Conditionsas a Percentage of Beneficiary Populationand Total Medicare Expenditures, 1997
20.2%
67.6%
39.8%
12.7%
31.1.%9.3%
8.8%
10.3%
0%
50%
100%
Medicare Population Medicare Spending
Neither
Cognitive
Physical
Both
Percentage of enrollees
Note: All figures exclude ESRD beneficiaries and the Medicare expenditures also exclude HMO beneficiaries.
Source: Marilyn Moon and Matthew Storeygard, One-Third at Risk: The Special Circumstances of Medicare Beneficiaries with Health Problems, The Commonwealth Fund, September 2001.
17
Medicare Beneficiary ExpensesNot Covered by Medicare
18Sources of Supplemental CoverageAmong Non-InstitutionalizedMedicare Beneficiaries, 2000
None8%
Multiple Plans9%
Public Plans Only*15%
Medigap Plans Only 19%
Medicare HMO Only
12%
Employer37%
Source: Analysis of 2000 MCBS by Bruce Stuart for The Commonwealth Fund.
* Includes Medicaid, Veteran Affairs, and various other programs.
19Percentage of All Firms with 200 or More Workers that Offer Retiree Health Benefits
to Medicare Age Retirees
31 3033
2523
0
20
40
1997 1998 1999 2000 2001
Source: Erosion of Private Health Insurance Coverage for Retirees: Findings fromthe 2000 and 2001 Retiree Health and Prescription Drug Coverage Survey. Kaiser/Commonwealth/HRET, April 2002.
20
Average Health Expenditures forMedicare Elderly Beneficiaries, 2002
Federal Medicare Program
Payments$5,141
Part B Premium$832
Cost-sharing and Other Costs
$638
Out-of-Pocket for Non-Medicare Health Costs
$2,287
Total and Beneficiary Estimated Out-of-Pocket Spending*
Beneficiary Out-of-Pocket for Medicare Services
Source: Maxwell, Storeygard, Moon, Modernizing Medicare Cost-Sharing: Policy Options and Impacts on Beneficiary and Program Expenditures, The Commonwealth Fund, November 2002.
* Urban Institute 2002 Simulation Model: Out of pocket includes: Part B premium,Medicare cost sharing, other premiums and non-covered services, drugs, vision and dental.
57.8%25.7%
7.2%
9.4%
Average out-of-pocket spending 2002 = $3,757
21
Distribution of Out-of-Pocket Expenditures Among Elderly Medicare Beneficiaries, 1999
Prescription Drugs18.1%
Other7.2%
Cost-Sharing for Medicare Services
15.6%
Part B Premium25.0%
Other Services
25.5%
Prescription Drugs8.6%
Source: Marilyn Moon, Urban Institute analysis of 1999 MCBS.
SupplementalInsurancePremiums
Note: Excludes HMO, ESRD, and Facility beneficiaries.
22
52
6
44
22
72
8
63
30
0%
20%
40%
60%
80%
All Elderly Poor Health,
Medicare Only*
Age 65–74, High
Income
Low-Income
Women Age 85+,
Poor Health
2000 2025
Projected Out-of-Pocket Health Care Spending as a Share of Income, 2000 and 2025
Source: Stephanie Maxwell et al., Growth in Medicare and Out-of-Pocket Spending: Impact on Vulnerable Beneficiaries, The Commonwealth Fund, December 2000.
* No insurance beyond U.S. Medicare basic benefits.
23
Medicare Experiencewith Private Plans
24Enrollment in Medicare Managed Care/
Medicare+Choice Plans by Beneficiaries, 1995–2003
11%12%
14%
16%16%16%
8%
11%
14%
0%
5%
10%
15%
20%
1995 1996 1997 1998 1999 2000 2001 2002 2003
Sources: Marsha Gold and Lori Achman, Medicare+Choice 1999–2001: An Analysis of Managed Care Plan Withdrawals and Trends in Benefits and Premiums, The Commonwealth Fund, February 2002; Centers for Medicare and Medicaid Services (CMS) Medicare Managed Care Contract Report; CMS 2002 Data Compendium, 2003; and CMS Medicare Enrollment: National Trends, 1966–2001, 2002. 2003 data are for May.
Percent of Medicare beneficiaries enrolled
25
• Risk and Payment Issues
– Expensive for Medicare program because of favorable risk selection and payment rules
– Incentives to “cream skim” and avoid risk
• Overall Failure to Date
– Private plans do not participate in many statesand geographic areas
– Wide geographic variability in premiums and benefits
– Unstable participation by private plansand providers
– High out-of-pocket burden on sick
– No standard benefit; impossible to compareplan benefits
Medicare+Choice: Lessons
Source: Geraldine Dallek, Brian Biles, and Lauren Nicholas, Lessons from Medicare+Choice for Medicare Reform, The Commonwealth Fund, June 2003.
26
CO (23%)
1%–10% (15 States)
>20% (6 States)
11%–20% (10 States)
<1% (19 States + DC)
OR (28%)
CA (33%)
AZ (30%)
Medicare+Choice Enrollees as a Percentof Medicare Beneficiaries, by State, 2003
Source: Geraldine Dallek, Brian Biles, and Lauren Nicholas, Lessons from Medicare+Choice for Medicare Reform, The Commonwealth Fund, June 2003.From Medicare+Choice, Fact Sheet, Kaiser Family Foundation, April 2003.
FL (19%)
PA (23%)
RI (34%)
27
3635
3029
23
20 2019
18 18
16 16 16 1615
14 14 1413
11 1110 10
9 9 9 98 8 8 8
7 76 6
5 5 54
0
20
40
NV W
INE
TXOK
MD DC VA
NM N
COR
MA FL AZ AL
MO K
S IA IL OH LA RI
NY TN K
YGA CA
WA PA CT
COW
V IN MI ID N
J HI
ARM
N
Source: Geraldine Dallek and Andrew Dennington, Physician Withdrawals: A Major Source of Instability in Medicare+Choice, The Commonwealth Fund, January 2002.
Percentage of Primary Care ProvidersWho Did Not Stay in Plan at Least One Year
Medicare+Choice Primary Care Provider Turnover Rates by State
National Average: 14%
282001 Premium and Selected Benefit Copayments: Tampa Medicare+Choice PlansPlan V1 Plan V2 Plan W Plan X1 Plan X2 Plan Y Plan Z1 Plan Z2
Enrollment limit No No Yes No No No No YesPremium $63 $0 $63 $179 $0 $0 $0 $19Doctor visits: Primary care
Specialist$10$5–$200
$15$15–$400
$10$25
$10$15
$10$15
$15$20
$10$15
$5$10
Outpatient visits: Ambulatory surgeryHospital visit
$200$200
$500$500
$0$50
$35$35
$50$50
$100$50
$25$25
$25$25
Durable medical equipment $0 $0 $0 $0 $0 20% $0 $0Diagnostic tests: Clinical lab
X-rays/diagnostic lab$0$40–$200
$0$40–$350
$0$0
$0$0
$0$0
$5$5 X-ray; $50 other radiation services
$0$0
$0$0
Radiation therapy $40/visit $40/visit $0 $0 $0 $5–$50 $15/service $10/serviceOutpatient rehabilitation services $40/visit $40/visit $25/visit $10–$15/visit $10–$15/visit $25/visit $15/visit $10/visitInpatient hospital care $500 per
admiss.; $200/day for days 7–30 at network hospital
$500 per admiss.; $200/day for days 7–30 at network hospital
$150/day $100/stay $300/stay $150/day $200/stay $0
Skilled nursing facility: Days 1–20Days 21–100
$0/day$85/day
$0/day$90/day
$0$97
$0$0
$0 $75$75
$0$0
$0$0
Home health care $0 $0 $0 $0 $0 $0 $0 $0Bone mass measurement $10/physician’s
office, $40 non-physician clinic
$15/physician’s office, $40/non- physician clinic
$0 $0 $0 $0 $0 $0
Prescription drugsFormulary drugs30–31-day supply
Generic copayBrand copay
90-day mail orderGeneric copayBrand copay
CapGenericBrand
Non-formulary30–31-day supply
Generic copayBrand copay
90-day mail orderGeneric copayBrand copay
Cap
$10$20 preferred
$20$40 preferred
$150/3 months generic and preferred & non-preferred brand$10$40
$10$80See above
No prescription drug coverage
$5$20
$15$60
Unlimited$250/6 month formulary & non-formulary brand$35$35
$105$105See above
$5$15
$15$45
Unlimited$50/month formulary & non-formulary brand$30$30
$90$90See above
$10Not covered
$30Not covered
UnlimitedNot coveredNot covered
$8$40
$24$120
$500/year
Plan has no formulary
(31-day)$7$20
Not availableUnlimited
$125/3 months non-formulary generic & all brand $30$30
Not available
See above
(31-day)$5$15
Not availableUnlimited
$125/3 months non-formulary generic & all brand $30$30
Not available
See above
a Plan Y has a $3,500 out-of-pocket limit protection for combined inpatient and outpatient services, not including certain office visit copays, prescription drugs, medical supplies, and selected other benefits.b $40 specialist per visit copay, except $10/visit to Allergy physicians, $5/specimen to hospital pathologists, $5/interpretation to hospital radiologists, $50/visit to ER physician, $200 for cataract surgery, $50/each allergy skin testing, and 40% of charges for non-plan second medical opinion.c $50 specialist per visit copay, except $15/visit to Allergy physicians, $15/specimen to all hospital pathologists, $15/interpretation to hospital radiologists, $50/ visit to ER physicians, $400 for cataract surgery, and 50% of charges for non-plan second medical opinion.d $200 copay for complex procedures, defined as Cardiac Catheterization, MRI, Lithotripsy, Nuclear Stress Test, CAT Scan, and PET Scan; $40 copay for all other simple diagnostic testing procedures; and $50 copay for allergy skin testing.e $350 copay for complex procedures, defined as Cardiac Catheterization, MRI, Lithotripsy, Nuclear Stress Test, CAT Scan, and PET Scan; $40 copayment for all other simple diagnostic testing procedures; and $50 copay for allergy skin testing.f $1,000 per admission and $200/day for days 7-30 at non-participating hospitals.g $1,000 per admission and $300/day for days 7-30 at non-participating hospitals.h Glucose monitors, test strips, lancets, and self-management training.Source: G. Dallek and C. Edwards, Restoring Choice to Medicare + Choice: The Importance of Standardizing Health Plan Benefit Packages, The Commonwealth Fund, October 2001.
29
Average Annual Out-of-Pocket Cost-Sharingfor Medicare+Choice Enrollees, 1999–2003
$1,964
$976$1,185
$1,438
$1,786
$0
$500
$1,000
$1,500
$2,000
1999 2000 2001 2002 2003
Note: Results are weighted by plan enrollment. Out-of-pocket cost estimates include the Medicare Part B premium, the Medicare+Choice premium, spending for physician andhospital copayments, and outpatient prescription drugs not covered by the M+C package.
Source: Marsha Gold and Lori Achman, Average Out-of-Pocket Health Care Costs for Medicare+Choice Enrollees Increase 10 Percent in 2003, The Commonwealth Fund,August 2003.
30Estimated Total Annual Out-of-Pocket Spending
for Medicare+Choice Enrolleesby Health Status, 1999–2003
$5,305
$2,696
$1,565
$4,783
$3,578
$2,823
$2,210$2,432
$1,842$1,503
$1,203
$1,430$1,194
$997$836$0
$1,000
$2,000
$3,000
$4,000
$5,000
1999 2000 2001 2002 2003
Poor Health
Fair Health
Good Health
Source: Marsha Gold and Lori Achman, Average Out-of-Pocket Health Care Costs for Medicare+Choice Enrollees Increase 10 Percent in 2003, The Commonwealth Fund, August 2003.
31Percentage of Medicare+Choice Enrollees with
Any Cost-Sharing for Inpatient Hospital Admissions, 1999–2002
4
33
78
13
0
20
40
60
80
100
1999 2000 2001 2002
Source: Lori Achman and Marsha Gold, Trends in Medicare+Choice Benefits and Premiums, 1999-2002, The Commonwealth Fund, November 2002.
Percentage of enrollees
32
Prescription Drug Coverage in Medicare+Choice, 2001–2003
29
6240
8
3130
0
20
40
60
80
100
2001 2003
No Prescription DrugCoverage
Generic PrescriptionDrug Coverage Only
Brand-Name andGeneric PrescriptionDrug Coverage
Percentage of enrollees
Note: Enrollment for 2001 is from March 2001. Enrollment for 2003 is fromFebruary 2003.
Source: Lori Achman and Marsha Gold, Medicare+Choice Plans Continue to Shift More Costs to Enrollees, The Commonwealth Fund, April 2003.
33
Prescription Drugs
34Sources of Supplemental Coverage forPrescription Drugs Among Non-Institutionalized
Medicare Beneficiaries, 2000
No Rx
Benefit
24%
Multiple P lans
4% Public P lans Only*
17%
Medigap P lans Only
9%
Medicare HMO
Only
13%
Employer
33%
Source: Analysis of 2000 MCBS by Bruce Stuart for The Commonwealth Fund.
* Includes Medicaid, Veteran Affairs, and various other programs.
35
28%19%
53%
0%
20%
40%
60%
Never Covered Only Part Year Covered All Year
Annual Drug Coverage
Source: Bruce Stuart, Dennis Shea, and Becky Briesacher, Prescription Drug Costs for Medicare Beneficiaries: Coverage and Health Status Matter, The Commonwealth Fund, January 2000.
Prescription Drug Coverage of Medicare Beneficiaries in 1996*
* Noninstitutionalized beneficiaries enrolled in Medicare throughout 1996.
Prescription Drugs: Barely One-Half Covered All Year
Percent of Beneficiaries
36Percentage of 65–to–69-Year-Old Medicare Beneficiaries with Employer-Sponsored Medical and
Drug Coverage, 1996 and 2000
0%
10%
20%
30%
40%
50%
Medical CoverageDrug Coverage
1996 2000 1996 2000 1996 2000
All Ages 65 to 69
Men Ages65 to 69
Women Ages 65 to 69
Source: B. Stuart, P. K. Singhal, C. Fahlman, J. Doshi, and B. Briesacher, “Employer-Sponsored Health Insurance and Prescription Drug Coverage for New Retirees: Dramatic Declines in Five Years,” Health Affairs Web Exclusive (July 23, 2003): W3-334–W3-341.
40.135.4
45.5
39.4
44.2
49.8
36.2
40.9
36.2
41.4
34.8
38.3
37
Projected Prescription Drug Spendingof Medicare Beneficiaries, 2006
81%71%
47%
21%13%
0%
30%
60%
90%
>$275 >$695 >$2,000 >$4,500 >$5,800
Level of Prescription Spending
Percent of Beneficiaries
Source: Dennis Shea and Bruce Stuart, Projections from cost-estimating model based on 1999 MCBS for The Commonwealth Fund.
Note: Community-residing beneficiaries only.
38Projected Distribution ofMedicare Beneficiaries and Total Drug
Expenditures, 2006 (updated 6/27/03)
7.5%
10.4%
20.8%
3.5%
57.8%
Source: Actuarial Research Corporation analysis for the Kaiser Family Foundation,June 2003.
$5,000+
$3,000–$4,999
$2,000–$2,999
$1,000–$1,999
$1–$999
$0 10.2%
16.3%
13.2%
16.7%
24.1%
19.6%
Beneficiaries Expenditures
39
Factors Accounting for Growth in Prescription Drug Spending per Capita, 1980–2011
Note: Data for 2000–2011 are projections.”Other” includes quality and intensity of services, and age-gender effects.Source: Centers for Medicare and Medicaid Services, The CMS Chart Series, 2003.
9
2.84.6 4.9 4.9
2.2
5 3.3 2.44.2
6.5
5.1
2.70.90.8
0
2
4
6
8
10
12
14
16
18
1980-1993 1993-1997 1997-2000 2000-2003 2003-2011
Calendar Y ears
Other
Drug Utilization (Number of Prescriptions)
Drug Prices (Consumer Price Index - Drugs)
10.79.2
16.1
13.3
10.0
Average annual percent change
40
0%
5%
10%
15%
20%
25%
30%
$0–$250 $251–$1,000
$1,001–$2,000
$2,001–$5,000
$5,001–$10,000
$10,001+
Level of Drug Spending (in 2004 dollars)
Share of Beneficiaries
1995 1999
Change in Distribution of Medicare Beneficiaries,by Level of Drug Spending from 1995 to 1999
Note: Excludes beneficiaries living in nursing facilities.Urban Institute analysis of the 1999 Medicare Current Beneficiary Survey, adjusted for Congressional Budget Office estimates of 2004 spending.Source: C. Boccuti, M. Moon, and K. Dowling, Chronic Conditions and Disabilities: Trends and Issues for Private Drug Plans, The Commonwealth Fund, October 2003.
41
Share of Total Drug Expenditures byMedicare Beneficiaries’ Spending Levels
0.0%
2.3%
5.5%
7.6%8.3%
8.5%8.3%
6.8%6.5%
6.1%
5.0%4.6%
3.6%
6.1%
4.2%
6.0%
6.8%
3.9%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
$0
$0-5
00
$500
-$1,
000
$1,0
00-$
1,50
0
$1,5
00-$
2,00
0
$2,0
00-$
2,50
0
$2,5
00-$
3,00
0
$3,0
00-$
3,50
0
$3,5
00-$
4,00
0
$4,0
00-$
4,50
0
$4,5
00-$
5,00
0
$5,0
00-$
5,50
0
$5,5
00-$
6,00
0
$6,0
00-$
7,00
0
$7,0
00-$
8,00
0
$8,0
00-$
10,0
00
$10,
000-
$20,
000
$20,
000
+
Per Capita Drug Expenditures
Percentage of Total Expenditures
Source: Marilyn Moon, Urban Institute analysis of the 1999 MCBS.
42
Prescription Drug Use and Spending AmongMedicare Beneficiaries, by Entitlement Status, 1998
34
25
0
20
40
Under age 65
with
disabilities
Age 65 and
older
$841
$1,284
$0
$500
$1,000
$1,500
Under age 65
with
disabilities
Age 65 and
older
Mean annual number ofprescriptions filled
Mean annual Rx spending
Source: Becky Briesacher et al., Medicare’s Disabled Beneficiaries: The Forgotten Population in the Debate Over Drugs, The Commonwealth Fund/Henry J. Kaiser Family Foundation, September 2002.
43
Annual Prescription Fills and Average Drug Spending, by Number of Chronic Conditions
Average Percentage with Number of Drug Spending More than $2,000Chronic Conditions Prescription Fills (2006 dollars) in Drug Spending
0 8 $1,346 18%
1 12 $1,819 27%
2 18 $2,543 43%
3 24 $3,426 56%
4 30 $4,046 66%
5 or more 40 $5,673 75%
Total 23 $3,320 51%
Note: Excludes end-stage renal disease and beneficiaries living full-year in a nursing facility.Urban Institute analysis of 1999 Medicare Current Beneficiary Survey. Spending in 2006 adjusted for Congressional Budget Office estimates.
Source: C. Boccuti, M. Moon, and K. Dowling, Chronic Conditions and Disabilities: Trends and Issues for Private Drug Plans, The Commonwealth Fund, October 2003.
44Out-of-Pocket Spending on Prescription Drugsas a Share of Income Among Beneficiaries
Under Age 65 with Disabilities, by Drug Coverage Status
19%
36%
44%
0%
25%
50%
Full-Y ear Rx Coverage Part-Y ear Rx Coverage No Rx Coverage
Percent of <65 beneficiaries with disabilities spending5 percent or more of their income on Rx
Source: Becky Briesacher et al., Medicare’s Disabled Beneficiaries: The Forgotten Population in the Debate Over Drugs, The Commonwealth Fund/Henry J. Kaiser Family Foundation, September 2002.
45Percent of Seniors in Eight States Who Spend $100+ Per Month on Drugs,
by Source of Drug Coverage
23%
43%
35%
25%
19%
12% 12%8%
0%
10%
20%
30%
40%
50%
Total No Drug
Coverage
Medigap State
Pharmacy
Program
HMO VA/Defense Employer Medicaid
Source: Dana Gelb Safran et al., Seniors and Prescription Drugs: Findings from a 2001 Survey of Seniors in Eight States, The Commonwealth Fund/Kaiser/Tufts-New England Medical Center, July 2002.
46
29% 30%
20%
80%
61%54%
0%
20%
40%
60%
80%
100%
CHF Diabetes Hypertension
Percent of Seniors in Eight States WhoSpend $100+ Per Month on Drugs, by Chronic
Condition and Prescription Drug Coverage
Seniors with Coverage Seniors without Coverage
Source: Dana Gelb Safran et al., Seniors and Prescription Drugs: Findings from a 2001 Survey of Seniors in Eight States, The Commonwealth Fund/Kaiser/Tufts-New England Medical Center, July 2002.
47Percent of Seniors in Eight States Who Did Not Fill a Prescription One or More Times Due to Cost or Skipped Doses
to Make a Prescription Last Longer in the Last12 Months, by Drug Coverage
18%
13%
11%
35%
27%
25%
22%
16%
14%
0% 10% 20% 30% 40% 50%
Either did not fill aprescription one or
more times or skippeddoses of medicines
Skipped doses ofmedicines to make the
prescription lastlonger
Did not fill aprescription one or
more times because itwas too expensive
Total
WithoutPrescriptionDrug Coverage
WithPrescriptionDrug Coverage
Source: Dana Gelb Safran et al., Seniors and Prescription Drugs: Findings from a 2001 Survey of Seniors in Eight States, The Commonwealth Fund/Kaiser/Tufts-New England Medical Center, July 2002.
48Percent of Seniors in Eight States Who Reported Forgoing Needed Medicines, by Chronic Condition and Prescription
Drug Coverage
14% 14%12%
25%
31%28%
0%
10%
20%
30%
40%
50%
CHF Diabetes Hypertension
Percent of seniors who did not fill prescriptions one or more times due to cost:
16% 17%14%
33%30% 31%
0%
10%
20%
30%
40%
50%
CHF Diabetes Hypertension
Percent of seniors who skipped doses of medicine to make it last longer:
Seniors with Coverage Seniors without Coverage
Source: Dana Gelb Safran, et al., Seniors and Prescription Drugs: Findings from a 2001 Survey of Seniors in Eight States, The Commonwealth Fund/Kaiser/Tufts-New England Medical Center, July 2002.
49
3,8513,5583,556
3,3933,383
3,3273,321
3,2803,267
3,1193,116
3,0943,0873,082
3,0543,054
3,0373,0243,0123,003
2,9612,9482,9432,9292,916
2,8662,862
2,8412,839
2,823
2,8142,8142,8142,814
2,7562,7352,7292,724
2,7072,702
2,6772,5712,563
2,4352,379
2,1962,137
2,0581,985
1,9581,896
2,815
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
ConnecticutIndiana
WashingtonMissouri
OhioNewIdaho
PennsylvaniaDelaw are
TexasMinnesota
UtahNorth Dakota
MaineLouisiana
VirginiaNew Jersey
KansasNebraska
FloridaWest Virginia
MontanaRhode Island
NevadaKentuckyWyomingVermont
Haw aiiNorth Carolina
Alaska
ArizonaNew YorkOklahoma
TennesseeWisconsin
ColoradoSouth Dakota
IllinoisSouth Carolina
Iow aMaryland
MassachusettsCalifornia
OregonMichigan
MississippiDistrict of
GeorgiaArkansasAlabama
New Mexico
Projected Annual Medicaid Prescription Drug ExpendituresPer Dual Eligible with Full Medicaid Benefits, 2002 (in Dollars)
U.S. Average
States spend $6.8 billion on prescription drugs for dual-eligible beneficiaries
Source: Stacy Berg Dale and James Verdier, State Medicaid Prescription Drug Expenditures for Medicare-Medicaid Dual Eligibles,The Commonwealth Fund, April 2003.
50Percent of Seniors in Eight States with Incomes
at or Below 100% of Poverty Who Have Heard of Medicaid and QMB/SLMB Programs
87%
96%93%
56%
94% 95%91%
96%
18%
8% 10% 10% 10%14%
20%
33%
0%
50%
100%
IL MI NY PA CA CO OH TX
Have heard of a government program called Medicaid
Have heard of a government program called QMB or SLMB
Source: Dana Gelb Safran et al., Seniors and Prescription Drugs: Findings from a 2001 Survey of Seniors in Eight States, The Commonwealth Fund/Kaiser/Tufts-New England Medical Center, July 2002.
51
Medicare PrescriptionDrug Improvement &
Modernization Act of 2003
52
Medicare Prescription Drug Improvement& Modernization Act of 2003
• Prescription drug coverage—largest benefit expansion in program history
• Structural changes—increased “privatization”
• Health Savings Accounts
53
Key Features of MedicarePrescription Drug Benefit
• Voluntary benefit effective January 1, 2006• Rx benefit through regional stand-alone private
Rx plans or HMOS or PPOs • $410 billion in federal government spending,
2004–2013• Annual premium in 2006 about $420—can vary
by plan• Annual $250 deductible indexed to drug spending• Coverage gap (“donut hole”)—no coverage for
spending between $2,250 and $5,100• Subsidies for low-income beneficiaries• Subsidies to employers to maintain retiree
coverage
54
Medicare-Approved DrugDiscount Card Program
• Effective June 2004, all beneficiaries (except those with Medicaid drug coverage) can enroll in a Medicare-approved discount card program; program ends when new benefit is implemented
• Choice of at least discount 2 cards; discounts of about 10%–15% of total drug costs; enrollment fee up to $30 annually
• Beneficiaries with incomes below 135% of poverty pay no fee and receive $600 annual subsidy toward the purchase of drugs; no asset test
• Bush administration assumes only 4.7 million out of 7.2 eligible low-income beneficiaries will sign up for the program
• Increasing participation rates to 90% would provide valuable assistance to 6.5 million of the most vulnerable elderly and disabled beneficiaries
55
Standard Drug Benefit
2006 2013
Annual Deductible: $250 $445
Coinsurance to Initial Limit:
25% 25%
Initial Limit: $2,250 $4,000
Out-of-Pocket Threshold: $3,600 $6,400
Coverage Gap: $2,850 $5,066
Coinsurance Above OOP: (greater of)
$2/$5or 5%
$3/$8or 5%
56
Prescription Drug Benefit 2006:Beneficiary Cost-Sharing
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000• $420 estimated annual
premium
• Medigap and Medicaid cannot fill in gap
• Employer contributions do not count as out-of-pocket spending
Total spending by beneficiary
25%Coinsurance
$2,850 Gap
5% after$3,600 out-of-pocket
$250 Deductible
$5,100
$2,250
57
Estimated Impact of the Medicare Law on State Medicaid Spending (FY 2004–2013)
$8.9$17.2
$88.5
Medicaid SavingsRetained by States
Mandatory StatePayments to Federal
Government(“Clawback”)
New State Costs(New Enrollment ofBeneficiaries and Administration of
Low-income Subsidy Program)
In Billions
Note: Estimates do not include the effects of Medicaid provisions in Title X of H.R. 1.Source: KCMU analysis of Congressional Budget Office estimates, 2003.
58
Beneficiary and Plan Share of Spendingin 2006, at Individual Expenditure Levels,
Under the New Medicare Drug Benefit
Source: Marilyn Moon, American Institutes for Research.
59
Structural Change:Increased “Privatization”
• Stand-alone private drug plans
• Establishes Medicare Advantage—HMOsand new regional PPO options
• Subsidies to encourage private plan participation—extra payments to HMOsbegin 2004; average payments exceedthose in traditional Medicare
• Moves toward defined contribution plan—demonstration of competition between traditional Medicare and private plansstarts in 2010
60Selected Commonwealth Fund Medicare Reports
• L. Achman and M. Gold, Medicare+Choice Plans Continue to Shift More Costs to Enrollees, The Commonwealth Fund, April 2003
• C. Boccuti and M. Moon, Adverse Selection in Private, Stand-Alone Drug Plans and Techniques to Reduce It, The Commonwealth Fund, October 2003
• C. Boccuti and M. Moon, “Comparing Medicare and Private Insurance: Growth Rates in Spending for Health Care Over 30 Years,” Health Affairs 22 (March/April 2003)
• C. Boccuti and M. Moon, Private, Individual Drug Coverage in the Current Medicare Market, The Commonwealth Fund, October 2003
• C. Boccuti, M. Moon, and K. Dowling, Chronic Conditions and Disabilities: Trends and Issues for Private Drug Plans, The Commonwealth Fund, October 2003
• G. Dallek, B. Biles, and L. H. Nicholas, Lessons from Medicare+Choice for Medicare Reform, The Commonwealth Fund, June 2003
• K. Davis, “American Health Care: Why So Costly?” Testimony before Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Washington, DC, June 11, 2003
• K. Davis, “Making Health Care Affordable for All Americans” Testimony before the Senate Committee on Health, Education, Labor, and Pensions, Washington, DC, January 28, 2004
• K. Davis, C. Schoen, M. Doty and K. Tenney, “Medicare Versus Private Insurance: Rhetoric and Reality,” Health Affairs Web Exclusive (October 9, 2002)
• S. Maxwell, M. Storeygard, and M. Moon, Modernizing Medicare Cost-Sharing: Policy Options and Impacts on Beneficiary and Program Expenditures, The Commonwealth Fund, November 2002
• M. Moon, Medicare Prescription Drug Legislation: How Would It Affect Beneficiaries? The Commonwealth Fund, October 2003
• D. G. Safran, P. Neuman, C. Schoen, et al., “Prescription Drug Coverage and Seniors: How Well Are States Closing the Gap?” Health Affairs Web Exclusive (July 31, 2002)
• D. Shea, B. Stuart, and B. Briesacher, Caught in Between: Prescription Drug Coverage of Medicare Beneficiaries Near Poverty, The Commonwealth Fund, August 2003
For additional information, visit The Commonwealth Fund’s website at www.cmwf.org