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Medi Gap
Congressional Juggling of Medicare Drug Coverage Leaves Many in the Lurch

October 2003

Surviving the "Donut Hole"

With a total of 130 local, regional and national AIDS organizations signing on, TAG included, a letter went out to House and Senate Medicare conferees during the final days of September.

While beneficiaries living with HIV/AIDS comprise a very small portion of the overall Medicare population, Medicare is a major source of health care for people living with HIV/AIDS.

Given the central role of pharmaceuticals in the current standard of treatment for HIV and the enormous reductions that have been observed in HIV/AIDS morbidity and mortality, the absence of a prescription drug benefit in Medicare is a glaring omission that prevents Medicare from providing an even minimally acceptable level of health care coverage for this population. Further, the absence of drug coverage for Medicare beneficiaries creates strains on other public programs, including Medicaid and the Ryan White CARE Act. Currently, many people living with HIV/AIDS are unable to obtain HIV medications because limited funding for the CARE Act has led at least nine states to establish waiting lists. Sadly, in the past month, news reports have documented the deaths of two people in West Virginia who died on waiting lists to receive HIV medications through the CARE Act's AIDS drug assistance program (ADAP). If Medicare were to cover prescription drug benefits for Medicare beneficiaries, this could provide essential and timely relief to allow the CARE Act's limited discretionary dollars to provide HIV health services to persons without Medicare or other sources of health coverage.

One of the contentious issues in the Medicare conference reportedly has to do with reconciling differences related to the handling of drug coverage for Medicare beneficiaries who also receive Medicaid (dual eligibles). A very significant percentage of people with HIV/AIDS in Medicare are believed to be dually eligible for Medicaid. We believe that an essential outcome of the conference is legislation that strengthens guarantees which dual eligibles and other low-income individuals will have access to the full compliment of prescription drugs that they need. We have concerns with the approaches taken to covering the dual eligibles by both the House and the Senate.

The House would provide dual eligibles with the same Medicare drug benefit as other Medicare beneficiaries -- a principle we support and a policy choice that could provide necessary and potentially timely relief to states struggling to finance their Medicaid costs for Medicare beneficiaries. The long phase-in period before Medicare assumes full responsibility for providing drug coverage to dual eligibles (in 2019), however, fails to provide meaningful short-term relief to states. Further, the scope of the underlying House drug benefit is insufficient for low-income Medicare beneficiaries who have extensive drug costs. The complete lack of drug coverage for all beneficiaries during the "donut hole" (annual drug expenses between $2,000-4,900) is especially problematic, inasmuch as virtually every person living with HIV/AIDS on antiretroviral therapy will have annual drug costs two to four times this amount. Low-income individuals would not have the resources to pay for drugs during the donut hole -- even when this is life-or-death necessity.

The Senate approach, on the other hand, is equally faulty. The Senate would enshrine a discriminatory policy by providing dual eligibles -- among the most vulnerable Medicare beneficiary groups due to their extensive health needs and low-incomes -- with no Medicare drug benefit. While the Senate would provide 100% federal financing for the Part B premium for dual eligibles, this is not significant fiscal relief for state Medicaid programs given the size of their prescription drug costs. State Medicaid programs are stressed in large measure because they are making up for gaps in Medicare coverage, and the Senate would legislate this inequity. Since Medicaid drug coverage is optional, and states have been struggling to control rapidly increasing prescription drug costs in Medicaid and have already cut deeply in other parts of their programs, some states may feel forced to restrict drug coverage or drop coverage (such as by eliminating drug coverage for the "medically needy").

We fear that both the House and Senate's handling of drug coverage for dual eligibles could leave dual eligibles without the prescription drugs they need. Under the bills as proposed,

The issues that you are addressing are frequently contentious and divisive. This is in large measure a result of their importance to millions of Americans who depend on Medicare. As you work to seize this historic opportunity to extend drug coverage, we respectfully ask you to ensure that all of the choices you make lead to a drug benefit that not only is as generous as existing resources allow, but that also takes into consideration the important subset of the Medicare population with extensive and high-cost drug needs.

Back to the TAGline October 2003 contents page.

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