Medicare and Prescription Drug Coverage Statistics and Solutions

(5/6/15)- A further study of the date released by the Centers for Medicare and Medicaid Services (CMS), as noted in out item dated 5/5/15 below, revealed that generic Vicodin, a pain-killing drug, was the most widely prescribed medication to Medicare beneficiaries in 2013, outside of their Part D coverage.

More than half the prescriptions for the drug, known generically as hydrocodone acetaminophen, came from family practice or internal-medicine doctors. The data analyzed showed that about 691,000 medical professionals prescribed Vicodin in 2013, compared to the next most frequently prescribed drug, an antibiotic prescribed by 555,000 medical personnel.

A group of about 200 family practitioners gave the drug to more than half of the beneficiaries to whom they prescribed.

(5/5/15)- In recently released data from the Centers for Medicare and Medicaid Services (CMS) costly new drugs, being used by a small percentage of Medicare beneficiaries accounted for a disproportionate share of Part D spending in 2013. The data, which did not include rebates paid by pharmaceutical companies, showed that total spending by the government on Part D came to about $103.7 billion in 2013.

Nearly 2,500 drugs were prescribed, with about 400 of them costing $3,000 or more per beneficiary. These drugs accounted for 26% of total spending, but only 1% of claims.

The heartburn drug Nexium was prescribed to almost 1.5 million beneficiaries and was the largest cost to Part D at about $2.53 billion, or $1,700 per treated patient.

Last year, Medicare officials released a similar data set for Medicare doctorsí billing records for office visits and certain procedures. Dow Jones & Co., publisher of the Wall Street Journal had brought suit to have the data released, and that suit overturned an injunction that had prevented these numbers from being released.

The data included information on about 36 million patients and one million prescribers.

(10/31/14)- Expanded Medicaid and the Affordable Care Act have been responsible for a good part of the drop in uninsured Americans for health-care coverage. The 2nd enrollment period will begin November 15, 2014, and run through February 15, 2015 for those seeking health care coverage.

The number of uninsured Americans has dropped by about 25%, or 8 million to 11 million people. That will still leave about slightly more than 30 million still uninsured. About one-half of those newly covered resulted from the expanded Medicaid program, while the other half came from those enrolling in private plans.

Gallup-Healthways Well-Being Index, which has been surveying Americans about their health insurance since 2008 recorded a drop in the percentage of American adults without insurance from 18% to 13.4% by the end of May. The Congressional Budget office estimates that the number of uninsured Americans will drop to 26 million by 2017.

At last count, 27 states had accepted the expanded Medicaid program, but several of the other states are close to going along with it or a variation thereof.

(9/5/07)- About 47 million Americans, or 15.8% of the population, lacked health insurance last year, up from 15.3% in 2005 according to the latest Census Bureau's snapshot of American living. The percentage of uninsured children rose to 11.7% from 10.9% a year earlier. This means that 9 million people have been added to the ranks of the uninsured in this country during the past seven years.

The percentage of Americans living below the poverty line fell to 12.3% last year from 12.6% in 2005, the first significant drop in a decade according to the report. The median household income increased for the second year in a row. The inflation-adjusted median -half were higher, half were lower- rose to $8,200, up 0.7% from 2005, but remained below the 1999 peak of $49,244.

The poverty line is used to decide eligibility for federal benefits, such as health care, housing and child care. It differs by family size and makeup. For a family of four with two children, the poverty level was $20,444 in 2006.

(9/2/05)- The FDA will hold three public meetings, and will accept public comments on any area that the agency regulates, which includes drugs, medical devices, dietary supplements and most food products. The newly appointed FDA Commissioner Lester Crawford will attend the meetings.

The first meeting will be held in Miami, Florida on September 13th.
The second meeting will be held in Boston on November 2nd.
The third meeting will be held in Phoenix on November 30th.

The FDA will accept written and electronic comments until November 30th.

Any consumer who wishes to participate in any of the meetings can register online at

(8/13/04)-According to a study done by the Center for Studying Health System Change, a Washington-based independent policy research firm, the number of Americans with job related health benefits declined to 63% from 67% between 2001 and 2003. The study was based on a national survey of 46,600 people under the age of 65. The Robert Wood Johnson Foundation contributes a substantial amount of the funds to the center that conducted the study.

Part of the decrease in coverage was attributed to a sluggish economy during this period of time, but a substantial reason that also contributed to the decline was the 28% increase in health-insurance costs over the two years. The decline in employees electing to take health coverage from an employer was most noticeable among young adults, falling to 89.9% in 2003 from 91.4% in 2001.

The proportion of people surveyed that had at least one worker in a family dropped to 81.4% from 84.2% in the two-year period. Many employers increased the premiums that the employees had to pay, while at the same time many also decreased the type of coverage available to the employees.

Recent Harris polls show that the pharmaceutical industry now share the bottom of the rankings with the oil, managed care and tobacco companies as far as positive public attitude goes. No other industry has fallen as hard and as fast as has the drug industry in the poll since 1997, i.e. 35% in 6 years. Just 13% of the poll respondents described pharmaceutical companies as "generally honest and trustworthy."

Some 57% of the poll respondents said that drug prices were "unreasonably high". A majority of those polled felt that the drug industry should be regulated by the federal government because drug prices have risen far in excess of the rate of inflation.. The pharmaceutical industry derives almost two-thirds of its profits in the U.S., and we are the only country in the western world that does not have some form of governmental regulations for drug prices and the advertising of drugs to the consumer..

The government has been operating under a huge deficit for several years, and there is no prospect of that becoming a surplus for many years down the road.. This article will summarize the different options that are available as sources of funds for which monies may be available in connection with the cost for drug coverage under Medicare. The passage of the prescription drug law under Medicare in 2003 is just a beginning. There are many deficiencies in that law that will have to be addressed in the coming years.

Federal investigators have found that the drug companies have repeatedly overcharged public hospitals, and clinics for low-income patients, making them pay more than the maximum prices allowed under the Public Health Services Act of 1992. There are more than 10,500 agencies that participate under the discount program created under Section 340B of the Act, and they serve more than 10 million people and spent a total of $3.4 billion on outpatient drugs last year.

Investigators at the inspector general's office in the Health and Human Services Department found that the charges were excessive but there is no fines or criminal penalties for manufacturers under the act. It is thus incumbent on Congress to remedy this situation. Under the program, public hospitals and clinics receive a minimum discount of about 15% off the manufacturer's price for branded-name drugs, and they are entitled to additional discounts if a drug's price has risen faster than inflation. On average prices are 20% to 25% lower than what hospitals can find through other programs.

Senator Jeff Bingaman, (Dem.-N.M.) said he was developing legislation to make sure that hospitals and clinics received the discounts that the law called for them to receive by adding civil and criminal penalties for violations of the act.

President Bush's original drug coverage plan provided for prescription drug coverage for the elderly starting with low-income people. President Bush's plan would have earmarked $77 billion over the next decade to provide the coverage through Medicaid to Medicare beneficiaries with annual incomes from 100 % to 150 % of the official poverty level ($11,610 to $17,415 for a two-member family). The monthly premiums or if there would be any co-payments required were not covered in the announcement.

Under the president's then proposal the federal government would pay 90 % of the costs for drug coverage and the states would pay the remaining 10 %. The states would administer the program and determine eligibility. The federal government would allow states to run demonstration programs that would provide Medicaid coverage to elderly people just for prescription drugs.

Tommy G. Thompson, secretary of Health and Human services announced such a program for Illinois under which 368,000 low-income elderly would be covered. PhRMA has sued the federal government when it has attempted to use Medicaid funds to cover Medicare beneficiaries. Please keep in mind that when the government was running surpluses in 2001, proposals to spend $300 billion over10-years to cover the elderly for their prescription drug costs was deemed to be an inadequate amount.

The average elderly person as of 1997 had about 18 prescriptions filled per year. In that same year a little less than $4,000 was spent per capita on national health expenditures. Total dollar wise this meant an expenditure of about $1.1 trillion. As per statistics from the CMS "health spending as a share of gross domestic product (GDP) fell in 1997 to 13.5%, the smallest claim of health spending on the nation's resources in the last 5 years".

In 1998 Medicare disbursements were about $215 billion. You may ask yourself where does this money come from? The answer is as follows:

According to CMS statistics about 65% of Medicare beneficiaries have some sort of prescription drug coverage. The type of coverage is as follows:

  1. Employer sponsored types of plans.
  2. "Dual coverage" with Medicaid.
  3. Individually purchased Medigap plans.
  4. Medicare Risk HMOs.
  5. Other, including Veterans Affairs.

As we have pointed out in our other articles Medicare is projected to go bankrupt in 2015 because the number of beneficiaries by then will be far in excess of those paying into the fund. See our article Solvency and the Social Security and Medicare Systems.

Once again in looking at the data from the CMS hospital and physician expenditures have traditionally accounted for the majority of personal health care spending. Recently the % of health care expenditures on these services has been declining. Home health care percentages of health care expenditures growth has also declined recently. Prescription drug expenditure has however increased at a double-digit rate during this same period.

Realistically therefore there are basically four major sources from which revenue can come from to cover the cost of prescription drug coverage for the elderly.

To give you an approximation of the total cost involved in adding prescription drug coverage to Medicare we will utilize the figures given by the National Academy of Social Insurance. We realize that these figures may not be accurate but we must start from some qualified source. According to their estimate the immediate impact would be to add 7% to 13% or about $18 to $24 billion per year. Remember also that the Balanced Budget Act of 1997 comes into the picture since all additional spending must be offset by reductions elsewhere to balance it out. This is the quandary. What is the solution?

We do not deny the fact that the drug industry is entitled to make a reasonable profit. Their research and development expenses are huge. It is estimated that drug companies will spend about $24 billion, or about 20 % of revenue, to discover and develop new medicines in 2001. As our article on patent extension drug legislation shows the industry sometimes tries to slip in some questionable legislation. We are not in favor of price controls for prescription drugs. For an equitable solution to be reached all sides must be willing to compromise on this matter, for the health and well being of our older citizens is at stake in this important matter.


By Allan Rubin
updated May 6, 2015


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