Study indicates cost of prescription drugs higher for seniors without insurance

HHS survey bolsters White House push for Medicare drug benefit

April 10, 2000
Web posted at: 3:07 p.m. EDT (1907 GMT)

WASHINGTON (CNN) -- Medicare beneficiaries without supplemental insurance pay 15 percent more for prescription drugs than those with additional coverage, according to a survey released Monday -- and the results of that survey have bolstered the Clinton Administration's call for a federal prescription drug benefit for seniors.

"This report makes clear that uninsured seniors not only lack prescription drug coverage, but also are denied the significant discounts and rebates that those with coverage receive," President Bill Clinton said in a statement.

The survey, conducted by the Health and Human Services Department, examined prescription drug costs for the nation's ever-expanding senior population, finding that those seniors participating in additional insurance programs tend to savor the deep discounts on prescription drugs negotiated by their insurance companies.

"This price gap is wide and growing," Clinton said. "It's time to level the playing field for both coverage and prices for all of America's seniors." In conjunction with that effort, the president also announced the White House will hold a conference this summer on drug costs and pricing practices.

Prescription drugs now account for about one-sixth of all out-of-pocket health spending by the elderly. Medicare currently only covers the cost of drugs administered in clinical settings.

The survey also confirmed previous findings that Medicare participants without supplemental private drug coverage get fewer drugs than they need. The study found that although the two groups report a similar health status, seniors without drug coverage purchase one-third fewer drugs and pay nearly double as those with the added coverage.

Other findings include:

-- A doubling of the price gap from 1993 to 1996 between drug prices paid by Medicare recipients with co-insurance versus recipients without co-insurance.

-- Medicare recipients without private drug coverage are five times more likely to report being unable to purchase drugs than those with private insurance.

-- Seniors without private coverage not only pay higher costs, but do not receive the discounts and rebates that insured seniors do, and,

-- One out of every four Medicare beneficiaries with higher incomes -- defined as about $45,000 for a couple -- lack coverage for prescription drugs.

"There is no significant decrease in the gap in drug spending as income rises, suggesting that drug coverage makes a difference across all incomes," the White House said in a statement.

Clinton requested in October of 1999 that a full survey be conducted of drug costs and usage for all 39 million Americans on Medicare. The lack of access to and high cost of prescription drugs are of paramount concern to the nation's seniors -- many of whom are on fixed incomes.

"As I have said repeatedly, the only way this issue can be adequately remedied is through a Medicare drug benefit that is voluntary, affordable, accessible, and administered competitively, using the most successful private practices to negotiate discounts on behalf of seniors," the president said Monday.

The president maintains that any added drug benefit should be enacted as part of broader Medicare overhaul that modernizes and strengthens the program. "We must make certain that any legislative proposal is more than a benefit in name only," Clinton added.

The administration's drug benefit proposal would cost $195 billion over 10 years and allow the government to contract with the same drug-purchasing firms used by many private health plans to get discounts and rebates for bulk purchases.

The administration's plan would start out paying up to $1,000 in drug costs for a $26 monthly premium, with both coverage and premiums increasing over time.

The president's budget contains an allocation of $43 billion, White House spokesman Joe Lockhart said during a press briefing Monday. That number "meets the tests" of accessability, affordability and universality "that the president has laid out," Lockhart said.

"You do it the same way you do it in the private sector. You do it in volume, you do it in discounts, you do it in rebates," Lockhart said, emphasizing that the administration's plan does not include a provision on price controls.

"Under the president's proposal, there is not a provision in there for price controls," Lockhart said.

Vox populi

Polls show wide support for providing new benefits in these times of prosperity and budget surpluses, and congressional interest in the issue is increasing.

House Republicans plan to release an outline of their Medicare prescription legislation later this week. It is expected to include three key administration priorities: setting aside $40 billion for benefits over five years; opening participation in the program to all Medicare participants; and making participation voluntary.

"Republicans are onto the fact that the American public is demanding a prescription drug benefit as a part of Medicare, and we're going to get there," Lockhart said, noting that the White House has not yet seen the Republican proposal.

But congressional Republicans may only target aid to low-income beneficiaries. GOP lawmakers have submitted proposals that range from subsidizing premiums to providing tax credits to low-income seniors who buy private insurance.

Senate Democrats hope to release their legislative outlines later this week. Last week, the Senate passed a non-binding budget blueprint earmarking $40 billion to help older Americans pay for drugs. But the budget does not require the new program or propose specifics.

"I am encouraged that there is growing support from both parties to address the prescription drug cost and coverage problems that burden our nation's seniors and people with disabilities," Clinton said.

The administration's Medicare prescription drug benefit proposal faces opposition not only from Republican lawmakers, but from the nation's pharmaceutical companies. Alan Holmer, president of the Pharmaceutical Researchers and Manufacturers of America, said that privately-based drug coverage is "doable, sensible, and needed" and urged Clinton to work with Congress.

"The president's plan is the wrong solution," Holmer said in a statement.

But of the myriad of congressional proposals, Lockhart said: "No one has put a legislative proposal down that details how it works. There's one proposal out there now that's being discussed that talks about having private insurance companies run the program." But, Lockhart added that private insurers say that will not work and that such a program would leave "many uninsured out in the cold."

"This is not an expansion, it's an acknowledgement that the world has changed," Lockhart said, in response to a query that the proposal would amount to an expansion in the welfare state. "All of this adds up to a strong case as to why in a modern medical system, you need to keep drugs affordable and you need a prescription drug benefit."

CNN's Major Garrett and The Associated Press contributed to this report.