34% of Calif. Seniors Lack Drug Insurance

The number of older Californians without insurance coverage for prescription drugs is increasing significantly, largely as a result of diminishing coverage by HMOs, according to new data.

Between 1998 and 1999, the percentage of California seniors with no prescription drug coverage rose from 25% to 34%, leaving about 1.2 million without the benefit, according to a study by the New England Medical Center.

Coverage of prescription drugs has emerged as one of the top domestic issues in the presidential election and figures such as those made available Wednesday confirm what many researchers have been predicting--that such coverage for seniors is on the wane as drug prices rise and HMOs are squeezed to control costs. The dearth of drug coverage for seniors has almost certainly contributed to what recent polls have shown is a high voter interest in the subject.

The increase in the percentage of California seniors without drug coverage was mirrored in 11 of 13 states studied by the researchers. Overall, in the other states studied, the percentage rose from about 30% to 36%.

But the figures were particularly striking in California, which traditionally has had a higher proportion of elderly in managed care plans. In the past, those plans usually have offered prescription drug coverage.

“For the HMOs, prescription drug coverage is an optional benefit--it’s not something they have to provide,” said Dana Safran, a health policy analyst at the New England Medical Center and one of the authors of the study. The research was funded by the federal Agency on Health Care Quality and Research, a division of the Department of Health and Human Services, and by the National Institute on Aging.

Medicare, the government insurance program that pays for health care for 39 million elderly and disabled Americans, does not cover prescription drugs. The only way seniors can obtain prescription drug coverage is to buy a supplemental insurance policy, enroll in an HMO that offers drug coverage or obtain it through a former employer who offers such coverage for retirees. HMOs are only required to offer the same benefits offered through the traditional Medicare program but, until recently, many have offered optional additional benefits such as vision care, dental care and prescription drugs, in part as an incentive to seniors to join their plans.

Data specific to California were made available to Rep. Henry A. Waxman, (D-Los Angeles), whose staff analyzed the figures in an internal report. Waxman is one of the leading proponents of expanding prescription drug coverage for the elderly and has encouraged his Democratic colleagues to use the issue aggressively in their districts.

The California figures mean that “more of our most vulnerable citizens will face inexcusable price discrimination in buying medicine,” Waxman said.

Typically, seniors without insurance for prescription drugs pay significantly higher prices than those who have insurance, in part because insurers buy in bulk.

The survey also found that in California 9% of seniors had at some point skipped taking their medication because the cost was too high--roughly the same number as in the other states surveyed.

Overall the rise in the percentage of seniors without drug coverage was greater in HMOs than in fee-for-service plans.

HMOs, which cover 30% of the elderly in California compared to about 16% nationwide, have been under unprecedented cost pressures because of tight government limits on payments.

To save money, managed-care plans employ a variety of strategies: Some drop prescription drug coverage altogether and others strictly limit which drugs they cover. Some plans cap the amount they will pay for drugs each year and a person who reaches that limit must then pay the full cost of any subsequent drug purchases.

“The only option for plans is cutting the benefits they offer,” said Walter Zelman, president of the California Assn. of Health Plans, which represents the state’s managed-care plans. “I hate to see that happen. . . . Seniors need drugs. You can’t expect any businesses . . . to stay in business when they project [that] they are going to lose money.”

Other managed-care representatives agreed that the numbers in the study were in line with overall national trends. “Given an environment of costs going up overall by 10% a year and reimbursements being held below 2% annually, the plans are sustaining losses and so . . . have had a number of not very good choices,” said Susan Pisano, a spokeswoman for the American Assn. of Health Plans.

The prescription drug data are part of a larger study comparing the care received by the elderly in managed-care plans to that of seniors in traditional fee-for-service Medicare plans. The larger study is scheduled for completion at the end of this year. However, the data on prescription drugs were presented at a conference this summer.

The study is the first effort to quantify at the state level the lack of prescription drug coverage among California seniors. Researchers surveyed 3,000 California seniors in 1998 and 1999 and a total of 6,500 seniors nationwide.