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Medicare Drug Plan May End Wisconsin Senior Program, Lead to Higher Costs

Posted on: Tuesday, 4 October 2005, 21:00 CDT

By Guy Boulton, Milwaukee Journal Sentinel

Oct. 5--Tens of thousands of seniors on modest incomes in Wisconsin could end up paying more for their prescription drugs under the new Medicare prescription drug benefit.

In what could become a classic example of unintended consequences, the Medicare drug benefit may lead to the end of a state program, SeniorCare, that provides more generous benefits and fewer restrictions.

A study done for AARP Wisconsin estimates that 94 percent of the roughly 90,000 people enrolled in SeniorCare will pay more under the new Medicare benefit.

Some experts question that figure. But no one disputes that SeniorCare offers better benefits.

"For the overwhelming majority of the SeniorCare participants, it's a far better program," said Jason Helgerson, executive assistant to the secretary of the Department of Health and Family Services.

By one estimate, someone with an income of $14,987 a year, who spends $250 a month on prescription drugs, would spend about $1,300 more a year under the new Medicare benefit.

The difference jumps to $2,100 a year if they spend $333 a month on prescription drugs.

Wisconsin is seeking federal approval to continue SeniorCare. But with enrollment in the new Medicare benefit set to begin Nov. 15, the state has yet to get word.

"To be honest, we are in a bit of limbo with regards to the federal government," Helgerson said.

Mary Kahn, a spokeswoman for the Center for Medicare and Medicaid Services, said she could not comment on whether Wisconsin will get approval to continue the program.

Kahn, who said the discussions are considered confidential, also could not comment on when the federal agency will make a decision.

"The best that we can say at this point is that everyone has the same goal in mind -- which is for the seniors in Wisconsin to get access, easy and affordable access, to the prescription drugs they need," Kahn said.

For now, the state is encouraging people to enroll in SeniorCare for next year. But as a backup, people 65 and older also must begin sorting through the roughly 45 prescription drug plans that will be available in Wisconsin under the new Medicare benefit.

"It's frustrating for a lot of seniors, because they love SeniorCare," said Ann Laatsch , a lawyer for Senior Law in Milwaukee. "It's a great program. And it's a simple program."

Wisconsin is one of four that have existing programs to help seniors with modest incomes pay for their prescription drugs.

For example, SeniorCare is designed to help someone who may be living on $13,000 a year and spending thousands of dollars a year on prescription drugs. Under the program, people pay $5 for generic and $15 for branded prescription drugs.

To qualify for SeniorCare's full benefit, people must have incomes of less than about $15,300.

People with incomes up to about $23,000 a year also are eligible but, depending on their income, pay annual deductibles of $500 or $850. In addition, the program helps people who have higher incomes but catastrophic drug expenses.

As with all income guidelines, the thresholds are higher for married couples.

SeniorCare is funded by a mix of federal and state money, annual fees and co-pays. The program cost $136.1 million in the fiscal year ended June 30, 2004, with the state contributing $38.2 million and the federal government contributing $41.5 million.

The new Medicare prescription drug benefit also contains subsidies for seniors with modest incomes.

The Department of Health and Human Services estimates that 10.9 million people -- out of 14.5 million who are eligible -- will receive subsidized coverage. And in most states, the subsidy will save seniors with modest incomes thousands of dollars a year.

"It really is what makes it works for them," Michelle Kitchman Strollo , a senior policy analyst at the Kaiser Family Foundation, policy research organization.

People with incomes of less than roughly $13,000 will pay $2 for generic and $5 for branded prescriptions. That will be their only expense under the standard plans. People with incomes of less than roughly $14,355 will pay 15 percent of the cost of their drugs after a $50 annual deductible. Their monthly premiums also will be lower.

But there's a catch.

To qualify, people must have almost no savings -- less than $6,000 to qualify for the full subsidy and less than $10,000 for the partial subsidy.

This is known as the asset test, and critics contend that it is too strict.

"You've got to be very, very poor to qualify for the full subsidy," said Laatsch , the attorney with Senior Law in Milwaukee.

In other words, someone with an income of $13,000 a year could spend $3,600 a year on prescription drugs, yet not qualify for any help if they had $12,000 in the bank.

They would get the standard benefit, worth about $1,100 a year for people who don't qualify for the low-income subsidy.

SeniorCare, in contrast, doesn't have an asset test.

Ruth Bock would qualify for the subsidy given her income, for instance, but she has a bit more than $10,000 in savings.

Bock, 88, hasn't read anything about the new Medicare drug benefit. But she is enrolled in SeniorCare and likes the program's convenience and benefits.

"I sure would be lost without it," she said.

An economic study done for AARP Wisconsin estimated that only 20 percent of the people in SeniorCare who meet the income requirements for the Medicare subsidy also will meet the asset test.

Others question that estimate.

"There aren't a lot of people who are poor and have assets above the cutoff," said Bruce Stuart , director of the Peter Lamy Center for Drug Therapy and Aging at the University of Maryland.

A study done for the Kaiser Family Foundation also came up with a much lower estimate. It estimated that almost 2.4 million people nationwide -- or about 17 percent of those with low-incomes -- would not qualify for the subsidy because of the asset test.

For certain, some seniors enrolled in SeniorCare will come out ahead under the new Medicare drug benefit.

Jacqui Grimshaw, soon to turn 78, estimates that she would spend more than $200 a month on prescription drugs without SeniorCare.

"I really can't afford the meds I need to take," said Grimshaw, who still works about 12 hours a week.

But given her income, the new Medicare drug benefit will save her $10 on brand-name drugs and $3 on generics.

"Cool," Grimshaw said when told this.

Other people, however, are certain to pay more.

"They are going to be absolutely devastated when they find out the difference between SeniorCare and the Medicare drug benefit," said Stephanie Sue Stein , director of the Milwaukee County Department on Aging

Wisconsin hopes to offer SeniorCare as an alternative to enrolling in a Medicare prescription drug plan. But to win federal approval, it must show that SeniorCare won't cost more than the new Medicare drug benefit.

The Department of Health and Family Services contends that's the case since it can get better prices on prescription drugs than the companies selling Medicare prescription plans.

The unknown is whether the federal government will agree. But, for now, tens of thousands of people 65 and older in Wisconsin could end up paying more for their prescription drugs next year.

"We are telling our people that we'll cross our fingers," said Laatsch, the Senior Law attorney. "But we don't know."

SENIORCARE: SeniorCare is a prescription drug assistance program for Wisconsin residents who are 65 years and older who meet the eligibility criteria. For information:

Call the SeniorCare Customer Service Hotline at (800) 657-2038, or

Visit the SeniorCare Web side at www.dhfs.wisconsin.gov/seniorcare

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Copyright (c) 2005, Milwaukee Journal Sentinel

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Source: The Milwaukee Journal Sentinel

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