Order Code RS21889
Updated October 6, 2004
CRS Report for Congress
Received through the CRS Web
Medicare Prescription Drug Card:
Estimates of Beneficiaries Who Qualify for
Transitional Assistance, by State
Chris L. Peterson
Analyst in Social Legislation
Domestic Social Policy Division
Summary
The Medicare Prescription Drug Improvement and Modernization Act of 2003
(P.L. 108-173) established a prescription drug benefit that begins in 2006. Until then,
Medicare beneficiaries may select one of the Medicare-endorsed prescription drug
discount cards that became available in June 2004. Certain low-income beneficiaries
may be eligible for up to $600 in “transitional assistance” in 2004 and again in 2005.
This report provides estimates of the number of noninstitutionalized Medicare
beneficiaries who meet the eligibility criteria for the transitional assistance. Nationally,
6.7 million noninstitutionalized beneficiaries are estimated to be eligible for the
transitional assistance. Numbers from the Centers for Medicare and Medicaid Services
have actual enrollment for transitional assistance at 1,253,132, as of October 1, 2004.
This report will be updated to reflect new legislation or data.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 (P.L.
108-173) established a prescription drug benefit that begins in 2006. Until then, Medicare
beneficiaries may select one of the Medicare-endorsed prescription drug discount cards
that became available in June 2004. Certain low-income beneficiaries may be eligible for
up to $600 in “transitional assistance” in 2004 and again in 2005.1 According to the
Centers for Medicare and Medicaid Services (CMS), actual enrollment for transitional
assistance was 1,253,132, as of October 1, 2004. Table 1 shows estimates of the number
of noninstitutionalized Medicare beneficiaries who meet the eligibility requirement for
the transitional assistance, estimated at 6.7 million nationally.2
1 For more detailed information about the drug card program, see CRS Report RL32283,
Medicare Endorsed Prescription Drug Discount Card Program, by Jennifer O’Sullivan.
2 CMS estimated that 7.2 million beneficiaries, including the institutionalized, would be eligible
for transitional assistance in 2004, and that 65% (or 4.7 million) of them would enroll (Federal
Register, vol. 68, no. 240, Dec. 15, 2003, p. 69891).
Congressional Research Service ˜ The Library of Congress

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CRS-2
The first column of numbers in Table 1 shows the total estimated number of
noninstitutionalized Medicare beneficiaries in each state. Of those individuals, the
estimated number meeting the income requirement (below 135% of poverty) is shown in
the next column. Of those, some have group health insurance that covers prescription
drugs, making them ineligible for transitional assistance. That estimate is displayed in the
third column of numbers. The difference between the number of beneficiaries meeting
the income requirement and those with disqualifying coverage is the estimated number
who are eligible for the transitional assistance, shown in the table’s penultimate column.
Source of Data. The state-by-state percentages in this report were calculated using
the March supplement of the Current Population Survey (CPS). The CPS is a survey of
99,000 households selected to be demographically representative of the U.S. civilian,
noninstitutionalized population. The analyses in this report were based on data from the
CPS for 2000, 2001, and 2002. The sample sizes available for many states are small,
especially when examining a subset like Medicare beneficiaries. Small sample sizes
increase the likelihood that the characteristics of the survey participants differ from the
characteristics of the population they are meant to represent. To increase the reliability
of state-level estimates, multiple-year averages were calculated.
Income and Poverty Defined. Under P.L. 108-173, the Secretary of Health and
Human Services (HHS) is authorized to define “income” for purposes of determining
eligibility for the drug card transitional assistance. According to HHS guidelines, annual
gross income is to be used, with some exclusions, such as Supplemental Security Income
(SSI). To account for these exclusions, the estimates of income used in this report were
obtained by taking respondents’ total income as reported in the CPS and subtracting from
it the types of income specified in the HHS guidance.3
The poverty guidelines, published by HHS, are used to determine eligibility for many
federal programs and were used in this analysis. The poverty thresholds, although more
commonly used for poverty-related analyses, are a somewhat different measure of poverty
developed by the Census Bureau.4 For a single person living in the 48 contiguous states,
135% of the poverty guideline is $12,569; for a family of two, 135% of poverty is
$16,862. In Alaska, 135% of poverty is $15,701 for a single person and $21,074 for a
family of two. In Hawaii, 135% of poverty is $14,445 for a single person and $19,386 for
a family of two.
Prescription Drug Coverage Defined. This analysis assumes that all
beneficiaries receiving the full Medicaid benefit, military-related health insurance, or job-
based coverage had prescription drug coverage. Although prescription drugs are an
optional benefit under Medicaid, all 50 states and the District of Columbia offer them as
part of their Medicaid benefit package. Surveys of employers report that virtually all
job-based health insurance plans available to workers as well as retirees include drugs.
3 A list of the types of income to be included and excluded as part of this calculation is online
[http://medicare.custhelp.com/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=1492&
p_created=1072239401].
4 A more in-depth discussion of the differences between poverty guidelines and poverty
thresholds appears in CRS Report 95-1041, Poverty in the United States: 2003, by Thomas Gabe.

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CRS-3
Table 1. Estimates of Average Number of Noninstitutionalized
Medicare Beneficiaries Who Met Eligibility Criteria for
Transitional Assistance, by State, 2000-2002
(in thousands)
Of Those
Meeting Income
Beneficiaries Eligible for
Number
Requirement,
Transitional Assistance
Meeting
Number with
Total
Income
Disqualifying
Percentage (with
Number of
Requirementa
Rx Coverageb
Number
90% confidence
Beneficiaries
(A)
(B)
(A-B)
intervals)c
Alabama
676
264
122
142
21.0% ± 2.4%
Alaska
50
16
10
6
11.1% ± 2.5%
Arizona
705
174
63
112
15.8% ± 2.5%
Arkansas
484
183
78
105
21.8% ± 2.4%
California
3,646
1,284
708
575
15.8% ± 1.2%
Colorado
483
132
58
75
15.4% ± 2.2%
Connecticut
535
116
42
74
13.9% ± 1.8%
Delaware
114
29
14
16
13.7% ± 2.0%
District of Col.
72
32
15
16
22.5% ± 3.3%
Florida
2,936
907
368
539
18.4% ± 1.2%
Georgia
898
337
127
210
23.4% ± 2.9%
Hawaii
167
56
26
30
18.1% ± 2.4%
Idaho
163
40
20
21
12.8% ± 2.3%
Illinois
1,592
455
149
307
19.3% ± 1.7%
Indiana
880
261
82
179
20.3% ± 2.1%
Iowa
439
111
42
69
15.7% ± 2.0%
Kansas
409
115
45
71
17.2% ± 2.1%
Kentucky
605
206
102
105
17.3% ± 2.3%
Louisiana
596
242
98
143
24.1% ± 2.8%
Maine
231
80
37
43
18.7% ± 1.9%
Maryland
681
191
84
108
15.8% ± 2.1%
Massachusetts
883
269
113
156
17.7% ± 2.0%
Michigan
1,341
379
184
195
14.5% ± 1.6%
Minnesota
533
131
56
75
14.0% ± 2.2%
Mississippi
390
169
93
76
19.6% ± 2.7%
Missouri
737
185
78
107
14.5% ± 2.1%
Montana
146
40
17
23
15.8% ± 2.3%
Nebraska
224
56
18
38
17.0% ± 2.4%
Nevada
255
66
26
40
15.8% ± 2.3%
New Hampshire
179
42
13
28
15.8% ± 2.0%
New Jersey
1,283
353
155
199
15.5% ± 1.6%
New Mexico
277
103
46
57
20.6% ± 2.9%
New York
2,650
903
488
415
15.6% ± 1.2%
North Carolina
1,171
454
173
281
24.0% ± 2.1%
North Dakota
93
27
6
20
21.9% ± 2.4%
Ohio
1,577
441
174
266
16.9% ± 1.6%
Oklahoma
501
160
63
96
19.2% ± 2.4%
Oregon
459
125
61
65
14.1% ± 2.2%
Pennsylvania
1,888
530
209
322
17.0% ± 1.4%
Rhode Island
174
59
27
32
18.4% ± 1.9%
South Carolina
646
257
117
140
21.6% ± 2.3%
South Dakota
113
33
11
22
19.9% ± 2.2%
Tennessee
769
318
167
151
19.7% ± 2.6%
Texas
2,310
828
339
489
21.2% ± 1.7%
Utah
192
50
22
29
14.9% ± 2.8%

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CRS-4
Of Those
Meeting Income
Beneficiaries Eligible for
Number
Requirement,
Transitional Assistance
Meeting
Number with
Total
Income
Disqualifying
Percentage (with
Number of
Requirementa
Rx Coverageb
Number
90% confidence
Beneficiaries
(A)
(B)
(A-B)
intervals)c
Vermont
85
30
16
14
16.5% ± 2.2%
Virginia
917
280
114
166
18.2% ± 2.4%
Washington
748
183
103
79
10.6% ± 2.0%
West Virginia
346
121
53
68
19.6% ± 2.0%
Wisconsin
766
172
87
85
11.1% ± 1.7%
Wyoming
65
18
8
10
15.4% ± 2.3%
U.S. Total
38,077
12,013
5,323
6,689
17.6% ± 0.3%
Source: Table prepared by the Congressional Research Service based on data from the March supplement
of the Current Population Survey, 2001-2003.
a. The income requirement is that beneficiaries must have income below 135% of the poverty level, as
defined by the Department of Health and Human Services’ federal poverty guidelines. In the 48
contiguous states, annual income in 2004 at 135% of poverty is $12,569 for a single person and
$16,862 for a married couple. In Alaska, 135% of poverty is $15,701 for a single person and $21,074
for a family of two. In Hawaii, 135% of poverty is $14,445 for a single person and $19,386 for a
family of two.
b. The estimates in the table are based on the assumption that all beneficiaries with employer-sponsored
health insurance, military-related coverage, or Medicaid had prescription drug coverage.
c. The range given for the 90% confidence interval demonstrates that, because the estimates are based on
only a portion of the population, the estimates are subject to variability. The size of the confidence
intervals depends primarily on sample size. A 90% confidence interval means that if all possible
samples were surveyed under the same sample design and general conditions, the estimated
percentage in each income category would lie within the confidence interval 9 out of 10 times. The
number of beneficiaries is based on the corresponding percentage point estimate. The number of
beneficiaries is subject to the same kind of variability as the percentage, even though the 90%
confidence interval is not provided.

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