The most sweeping changes to the federal Medicare program since its inception have just been passed by Congress. Nationwide, there are 40 million Medicare beneficiaries and 35 million of them are seniors. Seniors have gotten the lion’s share of the media ink on this one, given the power of their voting constituency and the controversy surrounding AARP’s endorsement of the proposal. But no one has written about the 5 million Medicare recipients under the age of 65 with disabilities, and policymakers didn’t design their healthcare overhaul with these folks in mind.The current Medicare program is a wonderful exercise in egalitarianism. Everybody gets the same deal regardless of age or health status. If you qualify for Medicare due to a permanent disability (and anyone under 65 who’s been disabled for two years does) you get the same set of benefits as do seniors on Medicare, including physician and hospital care, durable medical equipment and therapy services. This will no longer be the case when it comes to drug coverage, which is the centerpiece of the Medicare proposal.
About $400 billion will be spent over the next 10 years for this new entitlement. Exactly who’s entitled to the new drug benefit is an open question. In theory, all Medicare recipients regardless of age can opt for a new, voluntary drug plan that will be up and running in 2006. In practice, they will only do so if it makes both economic and health sense: Is it affordable and are the drugs I need a part of the package.
Unlike Medicaid, where in Minnesota all enrollees have access to the same menu of eligible drugs, the new law authorizes the development of private prescription drug plans, which can stand alone or be a part of a broader package of health services that incorporate the current array of Medicare services. This means private insurers or health plans can design a variety of program options with varying levels of benefits (the law requires that at least two plan choices be available to Medicare customers in each market). This is the kind of “product flexibility” and “market reform” Republicans have been craving for years.But market reform is meaningless if no one builds a product that meets your needs, and here’s where the disabled lose again. Said differently, if the new Medicare drug legislation were a warehouse grocery store, all the fully-stocked aisles would be labeled ‘seniors’ and none would say ‘disabled. ‘Those 35 million seniors, when compared to the 5 million disabled under age 65 on Medicare, are healthier, use fewer drugs, are less likely to smoke, have more money, report better health status, and are half as likely to suffer from depression. So says the Health Services Advisory Group, in a report on the Medicare disabled population that was commissioned by the U.S. Department of Health & Human Services. Who would you design a plan to serve, if given the choice? A common concern of many surrounding this legislation is that private plans would “cherry pick” the healthy seniors by designing plans to serve the healthiest of the lot, leaving the sickest members in the standard Medicare program with no benefit at all from the new drug benefit.The types of prescriptions used by the two populations also vary greatly, according to a recent report by the Kaiser Family Foundation. The most common types of drugs used by those with disabilities are psychotherapeutics (57% use these) whereas these drugs ranked 10th on the senior utilization list (10%). The disabled are much heavier users of pain killers and drugs for the central nervous system than are seniors, who are heavy users of heart medications. The new Medicare law allows for more restrictive drug formularies than current state Medicaid plans. The law provides general protections to make sure certain classes of drugs are included, but it doesn’t mean you’ll find your current staple medications. It means fewer choices and a greater likelihood that high-cost medications, like those for multiple sclerosis which can exceed $10-12,000 annually, will not be included. Why not? For the same reason no private health plan in Minnesota provides custodial care home care services. It doesn’t make good business sense. So some seniors—particularly low-income seniors—will benefit from the new Medicare legislation, and this is a good thing. For them this law may be a good first step. But for the lion’s share of the non-elderly disabled the health care marketplace will likely continue to build products that don’t meet their prescription drug needs. As a result, few Medicare disabled will benefit from the new law.So where will these disabled get their drug coverage? For most of the 2.5 million who also qualify as “dual eligibles” for the Medicaid program, they’ll continue to get their drugs from this state and federal plan, which is bad news for the states. These folks nationwide account for a small percentage of Medicaid enrollment but over 40 percent of Medicaid expenditures for medical services. The biggest ticket items are drugs and long-term care. With no reason to join the new Medicare drug plans that most likely will be designed for the healthiest of the 35 million seniors, the disabled will continue to use Medicaid, averaging 34 prescriptions a year, to the senior population’s 25. And the state won’t save a dime.