Nevada Cuts Drug Costs--Privately

While Congress debates how to help seniors pay for prescription drugs, Anthony Weber is singing the praises of Nevada’s partial solution to the crisis.

Weber, 83, has enrolled in a state-funded, privately managed prescription drug insurance plan and figures on saving $2,000 a year.

“I could hardly step out of the house to buy a candy bar,” said Weber, a retired grocery store manager. “Now I got some money to save and to get an oil change for my car.”

The Nevada plan addresses only a small segment of the state’s burgeoning senior population, but it is quickly being embraced by those who qualify for it--those who are believed to need help the most.

Under the program, called Senior Rx, the state pays an annual $1,180 insurance premium, plus a $100 deductible, for private prescription drug coverage for each person who is at least 62 years old, makes less than $21,500 a year and is not eligible for Medicaid.

Those who qualify pay nothing to enroll in the plan but are charged co-payments of $10 for generic drugs and $25 for name-brand drugs. They receive up to $5,000 in annual benefits.

Nevada’s private insurance approach to the issue is unique in the country.

At least 28 other states have established some type of pharmaceutical assistance program, according to the National Conference of State Legislatures. But most of those states directly subsidize prescription costs. California lawmakers in 1999 ordered pharmacies to sell prescriptions at discounted prices to Medicare recipients.

A state-funded private drug insurance plan, asserted Nevada Gov. Kenny Guinn, “is the right way to go. As a state, we shouldn’t be taking on the responsibility for running the program. The private sector can take more of the risks.”

Funding for Nevada’s program comes through the estimated $38 million that Nevada will receive this year as its share of settlement money that the tobacco companies agreed to pay in 1998 to reimburse states’ costs in treating sick smokers.

Legislators earmarked 15% of the tobacco settlement to fund the Senior Rx program, amounting to about $5.7 million this year--or enough to serve nearly 5,000 people on a first-come, first-enrolled basis.

State officials don’t know how many of the state’s 260,000 Nevada residents who are 62 or older meet the Senior Rx income qualifications.

The program’s funding is expected to accommodate 6,000 people next year. If more people seek coverage, Guinn said, he’ll ask legislators for more money.

“We don’t know how many people are out there who qualify,” he said, “but we’re going to find out.”

Senior Rx was adopted by the state Legislature in 1999. It launched late last year but required seniors to pay some of the premium costs. A disappointingly few 242 people enrolled for coverage.

Earlier this year, state lawmakers revised the program so participants pay nothing except co-payments. Nearly 1,000 people have now enrolled, and the number is growing daily.

The plan is underwritten by Fidelity Security Life Insurance Co. in Kansas City, Mo.

Marjorie Powell, assistant general counsel for the Pharmaceutical Research and Manufacturers of America, said the Nevada prescription plan “is a fascinating model.”

The state benefits, she said, because it faces a fixed cost in premiums, while the underwriter gambles that the pool of qualified Nevada seniors is sufficiently healthy so the benefits it pays out won’t exceed the state’s premiums.

Ron Pollack, executive director of the health care consumer organization Families USA, questioned whether Nevada’s program will succeed in the long run, especially if the insurance carrier experiences losses and seeks increased premiums or reduced benefits.

The answer, Pollack said, is for prescription benefits to be provided through Medicare, to help seniors nationwide without burdening individual states.

But Weber, for one, said he is glad Nevada lawmakers stepped in while Congress still debates the issue.

“Those Nevada legislators are doing a good job, thinking about us older people,” he said. “I didn’t realize I’d ever be in this situation, but I am.”