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2004-01-04 -- Medicare's drug benefit worse than some states' existing programs

New York Times, January 4, 2004

State Officials Are Cautious on Medicare Drug Benefit
By RAYMOND HERNANDEZ and ROBERT PEAR

WASHINGTON, Jan. 3 - State officials say the new Medicare drug benefit
provides less help to low-income elderly people than some state
pharmaceutical assistance programs, and they are searching for ways to
make sure state residents are not worse off as a result of the federal
law.

More than 1.5 million people now receive help with drug costs through
local programs in 30 states, according to the National Conference of
State Legislatures. The federal law has created great uncertainty in
most of those states, posing a challenge for legislators who will soon
convene in state capitals.

Four states, New York, New Jersey, Pennsylvania and Illinois, account
for more than half the enrollment in state pharmaceutical assistance
programs.

State officials face several questions: Should they keep their
programs intact, or eliminate them, or revise them to cover gaps in
the Medicare drug benefit? And what are the costs of the different
approaches?

These officials, still struggling to understand the federal law,
predict that many beneficiaries will be confused as longstanding
arrangements are disrupted and replaced with private Medicare plans
offering different packages of drug benefits under different sets of
rules.

Moreover, state officials say that some low-income people may see
their benefits reduced because the private plans are likely to cover
fewer drugs than some state programs.

The federal law would offer drug benefits to all 40 million Medicare
recipients, with extra assistance for about 14 million of those
beneficiaries with incomes less than 50 percent above the federal
poverty level.

But some of the state programs offer greater benefits with more
liberal eligibility standards. The New York program, Elderly
Pharmaceutical Insurance Coverage, or EPIC, is open to people with
annual incomes of $35,000 or less and couples with incomes of $50,000
or less - about four times the poverty level.

Some state programs pay for almost any prescription drug and allow
beneficiaries to use virtually any pharmacy. By contrast, state
officials say, the Medicare benefit will be delivered by private plans
that can establish lists of preferred drugs and can steer patients to
selected pharmacies.

Steven J. Rauschenberger, the assistant Republican leader of the
Illinois Senate, said Congress had not paid enough attention to the
efforts of states.

"Instead of emphasizing the good work being done by states and
encouraging states to continue, the federal government came up with a
one-size-fits-all Potomac solution," Mr. Rauschenberger said.

Thomas M. Snedden, director of the Pennsylvania program, welcomed the
expansion of Medicare but said he foresaw immense problems
coordinating its drug benefit with the popular state program.

"Customers used to getting a prescription drug covered with a
co-payment of $6 will now be told that they owe $100 because the drug
is not covered by their Medicare plan," Mr. Snedden said.

On Nov. 26, just two weeks before President Bush signed the Medicare
law, Gov. Edward G. Rendell of Pennsylvania, a Democrat, signed a
bipartisan bill expanding the state pharmaceutical program, so
enrollment will rise to 340,000 from the current 234,000.

In Connecticut, Matthew Barrett, a spokesman for the Department of
Social Services, said the Medicare drug benefit could save the state
millions. But, he added, coordinating benefits under the two programs
will be "a complex endeavor.".

Richard Kirsch, executive director of Citizen Action of New York, a
liberal advocacy organization, said, "It's going to be incredibly
difficult to meld Medicare and the state drug programs, and it's going
to be almost impossible for many seniors to tell whether the new
Medicare program or the state plans are better for them."

Republican members of Congress said the Medicare benefit had a
significant advantage over state programs. It is envisioned as a
permanent benefit, whereas states are free to curtail or abolish their
pharmaceutical assistance programs.

Moreover, Congressional Republicans say the local programs offer a
patchwork of assistance that varies among states and has many holes.

One of the biggest questions is whether seniors enrolled in Medicare
drug plans can turn to state programs for drugs that are not covered
by their plan.

"If you are on the green pill but your Medicare plan pays only for the
yellow pill, will you be able to turn to EPIC to get the green pill
paid for?" asked Richard N. Gottfried, a Democrat who is chairman of
the Health Committee in the New York State Assembly. "The private
plans would probably see that as diminishing, or cutting into, their
bargaining leverage with the drug companies."

Pharmacy benefit managers negotiate large discounts on certain drugs
by promising to deliver large numbers of patients who will use those
products.

In New York, 350,000 elderly people are enrolled in the state's
prescription drug program. And some state officials, including
Republicans close to Gov. George E. Pataki, now see an opportunity to
save money by revamping the state program so it would merely fill gaps
in the Medicare drug benefit.

But Democrats and even some leading Republicans in the State
Legislature want to preserve the state program as an alternative.

Kemp Hannon, a Long Island Republican who is chairman of the Health
Committee in the New York State Senate, said he expected Medicare drug
benefits to be much less generous than those provided by the state
program.

"New York State should leave the EPIC program alone unless we are
forced to do otherwise," Mr. Hannon said.

Thomas P. Morahan, a Republican state senator who engineered a major
expansion of the New York program in 2000, agreed. "We are not going
to push our senior population into an inferior program," Mr. Morahan
said.

In Massachusetts, State Senator Mark C. W. Montigny, a Democrat, said,
"The Medicare benefit is so inadequate for many seniors, we will have
to continue our state program as an alternative, not just a
supplement."

The new law encourages federal officials to coordinate the Medicare
drug benefit with state programs and it explicitly recognizes that
eligibility and benefits are "more generous" under some state
programs.

Dan Leistikow, a spokesman for Gov. James E. Doyle of Wisconsin, a
Democrat, said, "It's crystal clear that the new benefit under
Medicare is not as generous as what Wisconsin seniors get" under the
state's prescription drug assistance program, Senior Care.

The Congressional Budget Office says premiums for the new drug benefit
will average $35 a month. Under the standard coverage defined by
Congress, a beneficiary would pay the first $250 of drug costs, and
Medicare would cover three-fourths of costs from $251 to $2,250 a
year. Coverage would then stop until the beneficiary had spent $3,600
out of pocket, for a total of $5,100 worth of drugs. After that gap,
sometimes called a doughnut hole, the beneficiary would pay 5 percent
of the cost of each prescription.

But the details of coverage could vary from one Medicare drug plan to
another and from state to state.

Gov. Bob Holden of Missouri, a Democrat, wants the state to fill gaps
in the federal program. Specifically, Mr. Holden said, "I will ask the
State Legislature to modify our Senior Rx program to pay 75 percent of
drug costs" in the doughnut hole. "This action," he said, "will save
some Missouri seniors as much as $2,137," representing 75 percent of
drug costs from $2,250 to $5,100.