Prescription Drug Expenditures for the Medicare and Medicaid Dually Eligible A Study Conducted in the Context of the Medicare Prescription Drug Benefit and Its Corresponding Policies for State Governments

Abstract

Abstract Context: Although the new Medicare drug benefit moves individuals dually eligible for Medicare and Medicaid from states to the federal program, a significant administrative and financial burden will remain for states. Objective: To examine total and personal out-of-pocket spending of Medicare beneficiaries on prescription medications to determine the effects of having different coverage sources as compared to those beneficiaries who have not had prescription drug coverage. Sample and Design: Utilizing data from the 2001 Cost & Use Medicare Current Beneficiary Survey, a sample of 8,988 Medicare beneficiaries were examined to find effects drug coverage through Medicaid, Employer Sponsored Insurance, HMOs, or Private plans as compared to beneficiaries without coverage. All analyses also controlled for demographic and health characteristics. Outcome Measures: The four dependent variables examined were total annual prescription drug spending, total annual prescription drug spending in log form, total annual out-of-pocket prescription drug spending, and out-of-pocket spending as a percentage of total spending. Results: Holding other factors constant, beneficiaries with Medicaid prescription drug coverage spent $652 more in total prescription expenditures and almost $900 less out-of-pocket as compared to those without drug coverage (p < .0001). Those with diabetes or mental illness spent a total of $681 and $651 more than those without the respective conditions (p < .0001). Conclusion: With higher incidences of medical conditions and significantly higher spending on pharmaceuticals, the dually eligible population will represent a significant administrative and financial burden for state governments as these beneficiaries are moved into Medicare Part D.