Senior Rx

Illinois’ new program to help low-income seniors pay
for medicine has been called a “national model.” But critics
worry about the health of the state’s pharmacies

by Maura Webber

Margaret 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. That’s 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.

The 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.

Crane 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.

While 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.

In 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 SeniorCare’s additional costs could force some pharmacies to close or cut services, advocates for the elderly welcome the initiative.

“Clearly, Illinois is in the forefront,” says Donna Ginther, government relations liaison for the Illinois chapter of the American Association of Retired Persons.

The 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.

Richard 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 government’s encouragement of other states to pursue similar options.

“That made SeniorCare into something that was more than just an experiment,” Cauchi says, noting that at least 11 states are considering this approach.

SeniorCare 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.

By 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.

While the existing Circuit Breaker program covers higher-income seniors than SeniorCare will, it was of no help to Margaret Crane. That’s 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 Crane’s epilepsy are not covered.

With 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. “I’ll live better.”

The SeniorCare program is budgeted at $193 million in fiscal year 2003, with $100 million coming from the federal government. State officials don’t 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 state’s drug-buying system and to make it more efficient.

“The more money we save, the more money there is for population expansion,” says Matt Powers, administrator of medical programs for the state’s Department of Public Aid. “What’s important is we’re able to do a lot of neat things.”

For 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 drug’s health impact into consideration. Drugs not on the list will require a special authorization.

And the state hopes to save an additional $120 million by hiring a pharmaceutical benefits manager for Medicaid — a third party that will monitor the state’s 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.

But there may be risks. Critics of SeniorCare argue it could hurt the senior population in ways the administration never intended.

David Vite, president of the Illinois Retail Merchants Association, which represents a majority of the state’s 2,500 pharmacies, says under SeniorCare and other programs a disproportionate share of the state’s 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.

Under 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.

As 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 couples.

“Governments don’t have the courage to slow down the acceleration of benefits. It’s easier to tell Illinois businesses that they’re going to pay them less,” he says.

Vite 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 rebate program.

By contrast, others argue Illinois needs to do even more to help seniors pay for medicines and sort through the complex assortment of available services.

For 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 association’s 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 it’s often difficult to get through, Ginther says.

The 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.

Among 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 state’s 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.

Illinois Attorney General Jim Ryan, the Republican candidate, also supports the SeniorCare program and proposes to work with President George W. Bush’s 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 state’s 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.

While 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 spring’s legislative session.

George Hovanec, deputy director of the state’s 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 state’s health care system. “The will has to be there to live with consequences,” Hovanec says. “And you don’t know what the consequences will be.’’

Seniors 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.

Illinois Issues, May 2002

For information about how to subcribe to Illinois Issues go to:
http://illinoisissues.uis.edu/subscribe/subscribe.html

Go to Illinois Issues blog at http://illinoisissuesblog.blogspot.com/

Write a letter to the editor
I would like to comment on this article
(Please state month and author of article.)
Ask a staff member
Home