| For Immediate Release | June 13, 2000 |
Today, the President will release a new report from the Domestic Policy Council and the National Economic Council documenting the special challenges that the over 9 million Medicare beneficiaries in rural communities who are trying to get and afford life-saving prescription drugs. This report, prepared in response to a request from Senator Max Baucus (D-MT), shows that rural beneficiaries tend to have a greater need for prescription drug coverage but have fewer coverage options. Their incomes are lower, access to pharmacies is more limited, and out-of-pocket spending higher. The report will highlight that the private prescription drug coverage options available to rural beneficiaries are not only severely limited, but extremely expensive. The President will stress that it makes little sense to build on flawed private options like Medigap, the approach being advocated by the House Republicans today. Instead, he will urge Republicans to work with him to design a meaningful Medicare prescription drug benefit that provides an affordable, dependable, coverage option available to all beneficiaries.
RURAL BENEFICIARIES HAVE A GREATER NEED FOR PRESCRIPTION DRUG COVERAGE. Rural Medicare beneficiaries, who represent nearly one-fourth of the Medicare population, have lower incomes, more limited access to pharmacies, and higher out-of-pocket expenditures than their urban counterparts. Key findings of the report the President is releasing today include:
Rural beneficiaries pay more for prescription drugs than urban beneficiaries, and are more likely to go without needed medication because of cost concerns. Rural beneficiaries are over 60 percent more likely to go without prescription medication because of cost concerns than urban beneficiaries. In addition, because rural beneficiaries pay over 25 percent more out-of-pocket for prescription drugs than urban beneficiaries, they spend on average a greater percentage of their income for these medications.
Rural elderly are more likely to have high out-of-pocket spending than urban seniors, even among the chronically ill. About one-third of rural seniors versus 25 percent of urban beneficiaries have out-of-pocket spending that exceeds $500. This difference persists even when looking only at older Americans with heart disease, hypertension, stroke and cancer, about 45 percent of these rural seniors have out-of-pocket spending exceeding $500 compared to 36 percent of chronically ill urban seniors.
Rural Medicare beneficiaries are 50 percent less likely to have any prescription drug coverage. The proportion of rural beneficiaries who lack drug coverage for the entire year is 43 percent compared to 27 percent in urban areas. This lack of coverage is even more dramatic when looking those who are uninsured for part of the year. About 57 percent of rural Medicare beneficiaries do not have prescription drug coverage for all or part of the year, compared to 44 percent of urban beneficiaries. In addition, the oldest rural seniors are particularly likely to lack prescription drug coverage. Over half of rural seniors age 85 or older have no drug coverage –more than 50 percent higher than urban seniors that age.
In rural America, most beneficiaries who lack prescription drug coverage are middle income. Although rural seniors have lower incomes than urban seniors, about 45 percent of those without prescription drug coverage have incomes between 150 and 400 percent of poverty. They would not qualify for direct premium assistance in plans that subsidize loe income beneficiaries but do not have enough income to afford private insurance.
Rural beneficiaries are about one-third less likely to have retiree health insurance. Only about one in four of rural seniors have drug coverage through employer-based retiree insurance, compared to 35 percent of urban seniors.
Less than 1 percent of rural beneficiaries are enrolled in Medicare managed care with a prescription drug benefit. About 75 percent of rural beneficiaries do not have a managed care option, and no state has more than 30 percent of rural beneficiaries enrolled in managed care. Only one-third of rural managed care enrollees have a drug benefit in their basic benefit, and of those with drug coverage, nearly two-thirds have coverage limit of $1,000 or less for brand name and/or generic drugs.
Due to lack of alternatives and the critical need for drug coverage, rural seniors disproportionately purchase Medigap. About 13 percent of rural Medicare beneficiaries receive prescription drug coverage through Medigap compared to 11 percent of urban beneficiaries.
Premiums for Medigap for rural beneficiaries are high and increase with age. A typical 65-year old pays about $164 per month for a Medigap plan that includes limited prescription drug coverage. In Montana, the typical monthly premium for a Medigap plan with prescription drugs is $126 if you are age 65, but $184 if you are age 80 or older. On top of these high premiums, rural seniors with Medigap spend on average $442 out-of-pocket for drug costs -- 75 percent more than rural beneficiaries with retiree health coverage.
CONGRESS SHOULD WORK IN A BIPARTISAN FASHION TO DRAFT A MEANINGFUL MEDICARE DRUG BENEFIT. The President will call on the Congress to work together on a plan that is designed to cover people – not provide political cover. He will raise concerns about the Republican proposal that would use a flawed Medigap-like model that would not work for all Medicare beneficiaries.
THE PRESIDENT’S PLAN EXTENDS PRESCRIPTION DRUGS TO ALL MEDICARE BENEFICIARIES. The President's plan provides an affordable, accessible, prescription drug benefit option to all beneficiaries. It is:
Voluntary. Medicare beneficiaries who now have dependable, affordable coverage would have the option of keeping that coverage.
Accessible to all beneficiaries. Beneficiaries who join the program would pay the same premium and get the same benefit, no matter where they live, through a private, competitively selected benefit manager or, where available, through managed care plans.
Designed to give beneficiaries meaningful protection and bargaining power. A reserve fund in the President’s budget helps Medicare beneficiaries with catastrophic prescription drug costs. The plan also gives beneficiaries bargaining power they now lack by utilizing private prescription drug managers to negotiate discounts that can be extracted from volume purchasing.
Affordable to all beneficiaries and the program. According to CBO, premiums would be $26 per month in 2003. Low-income beneficiaries – below 150 percent of poverty ($17,000 for a couple) – would receive extra help with the cost of premiums; those below 135 percent would have no cost sharing.
Consistent with broader reform. The new, voluntary prescription drug benefit is part of a larger plan to strengthen and modernize Medicare. This plan would make Medicare more competitive and efficient, reduce fraud and out-year cost increases, promote fair payments, and improve preventive benefits in Medicare.
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