Prescription Drug Coverage, Utilization, And Spending Among Medicare Beneficiaries

Abstract

Outpatient prescription drugs are not a covered benefit under Medicare. There have been proposals in the past to expand Medicare benefits to include drug coverage, and current discussions dealing with "modernizing" the Medicare benefit package have raised the issue again. Using data from the 1995 Medicare Current Beneficiary Survey (MCBS), we describe the sources and extent of drug coverage among Medicare beneficiaries. The data show that 65 percent of Medicare beneficiaries have some level of drug coverage-a figure much higher than previous published numbers-and that 95 percent of Medicare health maintenance organization (HMO) enrollees have drug coverage. The data provide a baseline to observe future changes in the level of coverage, particularly among Medicare managed care plans.

Principles of Economics Crucial to Pharmacy Students' Understanding of the Prescription Drug Market

“…While the Medicare program only began coverage for drugs under Part D in 2006, the program did provide limited drug coverage through some Medicare managed care plans prior to 2006. 7,8 Furthermore, the Medicare program indirectly impacted the demand for drugs since its inception because coverage of physician services led to additional prescriptions being written, which increased drug utilization even in the absence of drug coverage via out-of-pocket expenditures. 7 Regulation can either move the equilibrium price closer to or further away from the perfectly competitive price.…”

“…7,8 Furthermore, the Medicare program indirectly impacted the demand for drugs since its inception because coverage of physician services led to additional prescriptions being written, which increased drug utilization even in the absence of drug coverage via out-of-pocket expenditures. 7 Regulation can either move the equilibrium price closer to or further away from the perfectly competitive price. Clearly, patent regulations provide monopoly power to branded drug manufacturers in the short term and, therefore, raise prices in the short term.…”

Medicare Reform: Fundamental Problems, Incremental Steps

“…Around 86 percent of seniors use prescription drugs in a year, filling an average of over 18 prescriptions (Davis et al, 1999). Total spending on prescription drugs averages around $1,000 per beneficiary (Gluck, 1999).…”

“…Presumably, these beneficiaries choose not to purchase coverage because the risk of truly catastrophic expenditures on drugs is lower than on other medical services, and because the private insurance market for drugs offers unattractive options. Beneficiaries without coverage have average drug expenditures that are about two-thirds as high as expenditures for beneficiaries with insurance (Davis et al, 1999).…”

Inadequate Prescription-Drug Coverage for Medicare Enrollees — A Call to Action

“…7 In 1992, the average annual expenditure for prescription drugs was $549 per recipient (among noninstitutionalized enrollees), over half of which was paid out of pocket. 7,9 However, individual rates of use vary dramatically. For example, at Harvard Pilgrim Health Care, a health maintenance organization (HMO) in Massachusetts that in one plan provided unlimited prescription-drug coverage for 21,382 Medicare enrollees, the average outpatient drug expenditure per Medicare enrollee was $1,153 in 1998 (Winkels M: personal communication).…”