State May Lose U.S. Funds for Aid to Elderly


California has failed so far to distribute any benefits from a special federal allotment to help poor people pay their Medicare premiums, and the state could face a potential loss of almost $16 million in federal funds earmarked for the program.

Under a law that took effect Jan. 1, the federal government will pay Medicare Part B premiums--$43.80 a month--for single people with incomes below $926 a month and couples with incomes below $1,241 a month.

But state officials acknowledged that none of the money allotted for California--$15.9 million for fiscal 1998--has been disbursed.

"The program is not yet operational," Ken August, a spokesman for the California Department of Health Services in Sacramento, said Wednesday. "It has been slow getting started because staff is dealing with other issues," such as the implementation of welfare reform, he said.

The department has assured the federal government that eligible beneficiaries will be enrolled retroactively, August said.

However, the money will revert to the Medicare trust fund if it is not disbursed by the end of the fiscal year on Sept. 30, according to a spokesman for the Health Care Financing Administration.

The federal government sent California officials an estimate that 99,000 people in the state would be eligible for the new benefit. But because the state is not yet set up to operate the program, there appears to be little awareness of its existence.

"Nobody knows about it, and there is no outreach by the state," Herbert Semmel, a staff attorney with the Senior Citizens Law Center in Los Angeles, said Wednesday. "If you go and apply for the program, all they can do is take down your name."

Semmel said the state has ignored his group's suggestions offered in a January letter that notices and applications be made available through senior centers, clinics and hospitals. August said a reply from the state to Semmel's letter is in draft form.

The special benefit, adopted by Congress last year, is designed to provide help for people with incomes ranging between 120% and 135% of the official poverty level. Unlike other programs, it does not require a contribution by the state. All the money comes from the federal government.

The new program can provide vital financial help for elderly people caught in an economic squeeze, especially because of high medical costs. The poorest Medicare beneficiaries spend 35% of their income on out-of-pocket medical costs, the American Assn. of Retired Persons said in a report issued Wednesday.

Many "impoverished older beneficiaries who can barely afford shelter and food are having much of their incomes consumed by out-of-pocket spending," said David Gross, a senior policy advisor at AARP.

The average out-of-pocket cost for Medicare beneficiaries is $2,149 a year, or 19% of income, according to the AARP study.

Those enrolled in health maintenance organizations have significantly lower costs, spending an average of $1,775 a year. The HMOs typically offer prescription drugs, eye care and other items not covered by Medicare. In return for the expanded benefits, HMO enrollees agree to stay within the HMO network of doctors and hospitals.

Medicare beneficiaries in traditional fee-for-service medicine, with wider access to doctors and hospitals, spend an average of $2,610, the AARP said. This also includes their spending for supplemental Medi-gap insurance.

"Out-of-pocket health spending is high because Medicare coverage is lacking in several key areas, including outpatient drug coverage," said John Rother, AARP's director of legislation and public policy.

Congress voted last year to provide $1.5 billion over the next five years for the new national program.

In addition to the income limits, beneficiaries eligible for the new program are allowed to have financial assets, such as bank accounts and stocks, worth up to $4,000 for an individual and $6,000 for a couple. Homes and automobiles are not counted in calculating the value of assets.

All Medicare beneficiaries pay $43.80 a month for Part B coverage, which helps pay doctor bills. The premium is typically deducted from a beneficiary's monthly Social Security check.

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