new program to help low-income seniors pay
for medicine has been called a national model. But critics
worry about the health of the states pharmacies
Crane, a farm manager for most of her working years, comes from
hardy stock and never expected to need much medicine. But the 65-year-old
east central Illinois woman now takes seven pills each day just
to help control her epilepsy. Thats on top of the medication
she takes for a range of ailments that include chronic pain in one
foot, which had to be reattached after she was in a car accident
several years ago.
retired Homer woman spends $58 of her $745 monthly income for the
drugs that keep her healthy. She pays for her prescriptions out
of her own pocket because Medicare, the federal health insurance
plan that covers about 40 million elderly and disabled Americans,
does not pick up the tab. Though Crane pays $49 each month for a
supplemental insurance policy to bridge gaps in her medical coverage,
she cannot afford drug coverage, too.
is not alone. Except for some prescriptions issued in hospitals,
basic Medicare coverage does not pay for drugs. As a result, an
estimated 10 million Medicare recipients across the country are
going without any form of prescription drug coverage. About half
of those seniors are living on incomes that are above the poverty
level, less than $15,033 for an individual, according to a 2001
study by the Henry J. Kaiser Family Foundation. The problem threatens
to grow. Drug prices are rising along with the number of seniors
who are 65 and older. In Illinois alone the group is expected to
grow by nearly half, from 1.5 million to 2.2 million in 2025, according
to U.S. Census projections.
federal and state efforts are under way to bridge this coverage
gap, Illinois already has established itself as a leader with a
new state/federal initiative called SeniorCare.
June, the program will extend prescription drug coverage to an estimated
368,000 seniors who have low incomes but still earn too much to
qualify for Medicaid, the jointly funded state and federal program
that provides drugs and medical services to the poor. While critics
say SeniorCares additional costs could force some pharmacies
to close or cut services, advocates for the elderly welcome the
Illinois is in the forefront, says Donna Ginther, government
relations liaison for the Illinois chapter of the American Association
of Retired Persons.
program, which won a federal waiver earlier this year, is particularly
attractive to states because it provides federal funding to expand
prescription coverage. Such assistance was previously offered only
by a patchwork of state-funded programs.
Cauchi, manager for the health care program at the National Conference
of State Legislatures, says Vermont got federal approval to do a
similar pilot project for a small number of seniors back in 1996.
But the announcement of Illinois SeniorCare program drew attention
across the country because it is much larger and because it coincides
with the federal governments encouragement of other states
to pursue similar options.
made SeniorCare into something that was more than just an experiment,
Cauchi says, noting that at least 11 states are considering this
is not the first Illinois effort aimed at helping lower-income elderly
with drug costs. In 1985, Illinois created the Circuit Breaker/Pharmaceutical
Assistance Program, which is now funded by state general revenue
dollars and Illinois federal tobacco settlement money. Like
SeniorCare, that program covers low-income seniors with higher incomes
than those eligible for Medicaid. It assists single seniors with
a 2001 income of up to $21,218 and couples with incomes up to $28,480.
contrast, SeniorCare will be available to any single person 65 or
older earning $17,720 or less, or any couple earning $23,880 or
less. Recipients will pay an average co-pay of $3 for each prescription,
though those with significantly higher drug costs will pay a slightly
higher percentage of the cost.
the existing Circuit Breaker program covers higher-income seniors
than SeniorCare will, it was of no help to Margaret Crane. Thats
because it only covers certain prescription drugs used to treat
a limited number of diseases that include heart and blood pressure
problems and diabetes. Such drugs as seizure medications for Cranes
epilepsy are not covered.
SeniorCare paying for her seizure medications, Margaret Crane expects
she will save about $700 a year. She hopes that will improve her
quality of life. After paying her housing and utility bills, she
usually has little left to spend on fresh food; instead she relies
on canned goods and frozen items. I never have potatoes, onions
or bread or anything extra like that, Crane says. Ill
SeniorCare program is budgeted at $193 million in fiscal year 2003,
with $100 million coming from the federal government. State officials
dont expect the state will have to spend additional dollars.
In fact, providing seniors with proper and timely drug treatments
could cut state costs by reducing the number of people who end up
needing costly hospital or long-term care. And the state also has
crafted new and controversial initiatives to tighten
the states drug-buying system and to make it more efficient.
more money we save, the more money there is for population expansion,
says Matt Powers, administrator of medical programs for the states
Department of Public Aid. Whats important is were
able to do a lot of neat things.
example, the state is simultaneously hoping to save about $54 million
annually through what it calls a supplemental rebate program that
will affect SeniorCare and the base Medicaid program, the largest
drug-buying entity in the state with a proposed pharmaceutical budget
of about $1.28 billion for fiscal year 2003. The program entails
asking drug-makers for additional rebates on top of those already
provided to Illinois Medicaid program. The state will then
draw up a list of preferred drugs, taking price as well as a drugs
health impact into consideration. Drugs not on the list will require
a special authorization.
the state hopes to save an additional $120 million by hiring a pharmaceutical
benefits manager for Medicaid a third party that will monitor
the states Medicaid drug - dispensing system and find ways
to make it more efficient. This initiative will not directly affect
the SeniorCare program, but it will preserve state revenue that
could be made available to expand health programs.
there may be risks. Critics of SeniorCare argue it could hurt the
senior population in ways the administration never intended.
Vite, president of the Illinois Retail Merchants Association, which
represents a majority of the states 2,500 pharmacies, says
under SeniorCare and other programs a disproportionate share of
the states proposed savings will be born by pharmacies. For
example, Vite says about 120,000 seniors in the Circuit Breaker
program will now be eligible for the SeniorCare plan. The new program
will give seniors access to a greater number of drugs for which
the state pays pharmacies less.
the Circuit Breaker, Vite says the state pays pharmacies a $3.60
fee for dispensing each prescription, as well as a payment for the
drug ingredients. The formula used for the price paid to the pharmacy
for the drugs is based on the average wholesale price minus 10 percent,
Vite says. Under SeniorCare, he says the dispensing fee will be
dropped to $2.65. The price to be paid for the drug ingredients
also will drop. The formula for determining that reimbursement rate
will be the average wholesale price minus 14 percent for brand drugs
and 51 percent for generic drugs.
a result of the hit pharmacies will take on their profits, seniors
and all Illinois residents may see more pharmacies close or cut
back on staff, he warns. Some pharmacies might be forced to cut
out deliveries to home-bound seniors, while others might simply
stop honoring Medicaid, which covers 140,000 elderly in Illinois
whose incomes are less than $7,531 for individuals or $10,149 for
dont have the courage to slow down the acceleration of benefits.
Its easier to tell Illinois businesses that theyre going
to pay them less, he says.
could support creation of a restrictive drug list that would limit
the number of the more expensive brand name drugs the state makes
available to Medicaid recipients. But Vite is proposing a list that
has more teeth than the one being developed under the current supplemental
contrast, others argue Illinois needs to do even more to help seniors
pay for medicines and sort through the complex assortment of available
example, the Illinois chapter of AARP is supporting state legislation
that would ensure continuation of the Senior Health Assistance Program,
which provides funds to area aging agencies that help seniors understand
what assistance is available and how to apply for it. That bill
would make the program part of state law rather than a budget line
that could be eliminated, the associations Ginther says. In
addition, her group would like to see expansion of a senior help
line now offered by the Department on Aging. So many seniors flood
the lines with questions about drug coverage that its often
difficult to get through, Ginther says.
two main candidates for governor also have weighed in on the politically
volatile issue of health care costs for seniors. U.S. Rep. Rod Blagojevich,
the Democratic candidate, credits himself with working to ensure
the approval of the waiver that led to SeniorCare. And the Chicago
congressman has other ideas for extending savings to every senior
in the state. Such assistance would be paid for through a combination
of state revenue, higher rebates from drug-makers and a 43-cent
hike in the tax on a pack of cigarettes, which has been estimated
to yield $333.9 million annually.
the key elements of the Blagojevich plan is a proposal to negotiate
better drug prices with manufacturers by pooling the purchases of
seniors, state employees and Medicaid. While Blagojevich says this
could save $158 million annually, critics worry drug-makers could
pose significant legal obstacles. Blagojevich also would provide
discount cards to all seniors for a one-time $20 fee that would
give them access to the same discounts on drugs as the states
Medicaid recipients. And he would offer catastrophic coverage for
seniors who do not qualify for any state assistance but who spend
at least 10 percent of their income on prescription drugs.
Attorney General Jim Ryan, the Republican candidate, also supports
the SeniorCare program and proposes to work with President George
W. Bushs administration to extend coverage to seniors with
incomes of up to $21,218 for an individual and $28,480 for a couple.
While this is the same threshold that is now in place for the states
Circuit Breaker program, expanding the SeniorCare income limit would
benefit an estimated 150,000 because that program provides much
more comprehensive drug coverage than Circuit Breaker.
SeniorCare itself is set to be available this summer, some officials
say other proposals for holding down drug costs the supplemental
rebate program and the pharmacy benefits manager for Medicaid
might not make it out of this springs legislative session.
Hovanec, deputy director of the states Bureau of the Budget
and Matt Powers predecessor in the Department of Public Aid,
says extending drug coverage is not easy. It demands sacrifices
in the form of higher taxes or lower profits in the states
health care system. The will has to be there to live with
consequences, Hovanec says. And you dont know
what the consequences will be.
like Margaret Crane and others who would benefit if more
of Illinois elderly residents qualified for prescription coverage
are hoping state officials will find a way to help more people
with their prescription bills. When SeniorCare kicks in, Crane may
finally have some extra money that would buy her new clothes or
fresh food. I could sure use it, she says.
Maura Webber is a free-lance business writer.
Issues, May 2002
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