one-fifth of their income on drugs. This couple would see their out-of-pocket drug costs reduced to 4.1 percent of income under the House bill, and 3.4 percent under the Senate bill. While both bills provide substantial subsidies for beneficiaries at 130 percent of poverty, subsidies are phased out at slightly higher income levels. A couple at 160 percent of poverty ($20,944), still a very modest income, would pay $2,437, or 11.6 percent of their income, on prescription drugs under the House bill, and $3,208, or 15.3 percent of their income, under the Senate bill. Although this coverage is an improvement, spending between 10 and 15 percent of personal income on drugs still represents a significant financial hardship, especially in light of out-of-pocket expenses for other services, Part B premiums, and supplemental health insurance premiums.

About 10.2 million elderly and disabled Medicare beneficiaries fall in the $10,000$20,000 income bracket. Beneficiaries in this near-poor group spend more out-of-pocket on prescription drugs than those in other income groups, despite the fact that their total drug spending is lower on average. More than one-fourth (27%) of the near-poor spent 5 percent or more of their income on out-of-pocket drug costs in 1999, while nearly one of eight (12%) spent 10 percent or more of their incomes on out-of-pocket costs for drugs.

The near-poor's out-of-pocket drug spending increased 37 percent from 1993 to 1999. More so than other income groups, they depend on private Medicare+Choice plans for their drug coverage--a highly unstable source of coverage in recent years due to plan withdrawals, rising cost-sharing, and shrinking benefits.

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Contact: Mary Mahon
mm@cmwf.org
212-606-3853
Commonwealth Fund
15-Aug-2003

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