Unlike most employer-sponsored health insurance, Medicare, the federal health insurance program for older Americans and those with disabilities, generally does not pay for outpatient prescription drugs.

The escalating cost of prescription drugs and their impact on Medicare beneficiaries have led to increasing public debate on a new Medicare prescription drug benefit, says Pamela Johnson, AARP South Carolina Director. Since Medicare was created in 1965, prescription drugs have become essential in the treatment and prevention of diseases.

According to published reports by AARP, Medicare beneficiaries are projected to spend an average of $2,510 (or 19% of income) out-of-pocket on health care in 2000 (not including long-term health costs.)

Prescription drug spending accounts for 19 percent of this total, and is the largest spending category, after premium payments. Beneficiaries spent an average of $480 out-of-pocket on prescription drugs in 2000. Average out-of-pocket prescription drug spending was even higher for beneficiaries in poor health ($685), those without drug coverage ($715), and those who are severely limited in their activities of daily living ($725).

Because of Medicare’s gap in coverage, beneficiaries must either pay for prescription drugs out of their own pockets, obtain private or public supplemental coverage that will assist with the costs, or join a Medicare HMO that offers prescription drug benefits. While 65% of Medicare beneficiaries have some type of coverage for prescription drugs, that coverage often has serious limitations, and, therefore, may not protect beneficiaries from high out-of-pocket costs.

Much of the Medicare prescription drug debate has centered on whether to provide benefits to low-income beneficiaries only or to all beneficiaries, and what levels of premium and cost-sharing assistance should be available to beneficiaries with low incomes, says Johnson.

Some of the proposed income thresholds for different levels of assistance are:
• Below 135% of the federal poverty level (FPL)
• Up to 150%
• Up to 175%

According to Johnson, AARP believes that a Medicare Prescription drug plan must be available to all Medicare beneficiaries and that the benefit should be voluntary and affordable.

One half of Medicare’s 39.6 million beneficiaries have incomes less than 250% of poverty (20.1 million). One-fifth have incomes between 175% and 250% of poverty. Of those with incomes below 250% of poverty, about 38 percent (7.6 million) lack prescription coverage. Of those with higher incomes, 28 percent (5.4 million) have no drug coverage. Beneficiaries with incomes between 175% and 250% of poverty spend the most out-of-pocket on prescription drugs, on average, of the income groups examined. The variations in out-of-pocket prescription drug expenses may be due to differences in sources of drug coverage (e.g., Medicaid, employer-sponsored), duration of such coverage, or utilization.

AARP believes that modernizing Medicare’s benefit package to keep up with advances in medicine is a must. Prescription drugs help keep people healthy, independent and out of hospitals. Medicare should be like most other health insurance plans and include prescription drugs as an optional part of the benefit package offered by all participating plans. In addition, AARP also states believes that a new, defined Medicare package must make prescription drugs a part of that package; the benefit must also provide additional subsidies for low-income beneficiaries; it must be financed in a responsible manner and should be a part of a strong and more effective Medicare program.

What can you do? First, contact your senators and representatives today. You can log on to www.AARP.org/prescriptiondrugs to email them directly, or call their local offices. Tell them to make an affordable, voluntary prescription drug benefit available to al people in Medicare before the next election.

Second, contact AARP for a mail-in card that will add your name to their list of advocates for a Medicare prescription drug benefit.


To contact:
South Carolina’s AARP office, write to AARP, 1201 Main Street, Suite 1980, Columbia, SC 29201,
or call (803) 748-1275Fax- (803) 748-1288, or visit them at www.aarp.org