Medicare Prescription Drug Bill Passed

The 108^th Congress, for the first time since Medicare was created in 1965, significantly expanded the program's benefits by adding prescription drug coverage. The Medicare expansion, signed into law by President Bush on December 8, 2003, is entitled "The Medicare Prescription Drug Improvement and Modernization Act of 2003." Unfortunately, the new law, to be fully enacted in 2006, represents far less than comprehensive coverage and will actually reduce prescription drug coverage for some low-income individuals.

Medicare, the largest health care provider in the U.S. serving slightly less than 40 million senior citizens and disabled persons, is an increasingly important source of health care for people with AIDS. To be eligible for Medicare a person must either be 65 years of age or older or have received Social Security disability insurance payments for 24 months. As people with AIDS are living longer due to improved HIV treatments, a growing number of people with AIDS qualify for the Medicare program. Nationwide, it is estimated that 100,000 people living with AIDS are Medicare beneficiaries.

The Medicare program will require people with AIDS to make tough choices when it is fully enacted in 2006. Today, since Medicare does not cover pharmaceuticals, many Medicare recipients with AIDS use the AIDS Drug Assistance Program (ADAP) or Medicaid to access life-saving prescription drugs. Currently, many low-income Medicare recipients with AIDS who are also eligible for Medicaid are able to access and pay for their prescription drugs through Medicaid without any out-of-pocket costs. Under the new Medicare law, states will be prohibited from allowing Medicare recipients to use Medicaid to cover the costs of prescription drugs. This could reduce access because the new Medicare drug benefit will be provided by private prescription drug plans, which will not be required to cover all drugs. Plans will be required to cover drugs in all "therapeutic" classes but some drugs might be excluded from their formularies.

In addition, the new Medicare benefit has a complicated cost structure that includes some level of out-of-pocket costs for all recipients. For Medicare beneficiaries at 135% of the poverty line or below ($12,123 for an individual and $16,362 for a couple), individuals will have to pay $1 to $5 co-payments for each prescription. For individuals above 135% of the poverty line, the plan institutes a monthly premium (estimated at $35 per month) as well as an annual deductible of $250. After meeting the deductible, the plan covers 75% of the overall drug costs up to $2,250. Once this plateau has been reached, the Medicare recipient is expected to pick up the next $2,850 in drug costs on his or her own. This gap in coverage is what has been called the "doughnut hole." Once a recipient has a total of $5,100 in drug costs ($3,600 of which would be out-of-pocket costs to the recipient) the federal coverage begins again. At this point, coverage is resumed under a "catastrophic coverage" category and recipients will be required to pay $2 per generic and $5 per brand prescription or 5% of the drugs costs, whichever is greater.

The new Medicare drug benefit is filled with complex challenges for recipients. The San Francisco AIDS Foundation will continue to work with its state and national colleagues to ensure that Medicare responds as effectively as possible to the needs of people living with AIDS.