Medicare Prescription Drug Card: Estimates of Beneficiaries Who Qualify for Transitional Assistance, by State

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 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 jobbased 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. 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) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Col. Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Total Number of Beneficiaries 676 50 705 484 3,646 483 535 114 72 2,936 898 167 163 1,592 880 439 409 605 596 231 681 883 1,341 533 390 737 146 224 255 179 1,283 277 2,650 1,171 93 1,577 501 459 1,888 174 646 113 769 2,310 192 Number Meeting Income Requirementa (A) 264 16 174 183 1,284 132 116 29 32 907 337 56 40 455 261 111 115 206 242 80 191 269 379 131 169 185 40 56 66 42 353 103 903 454 27 441 160 125 530 59 257 33 318 828 50 Of Those Meeting Income Beneficiaries Eligible for Requirement, Transitional Assistance Number with Disqualifying Percentage (with Rx Coverageb Number 90% confidence (B) (A-B) intervals)c 122 142 21.0% ± 2.4% 10 6 11.1% ± 2.5% 63 112 15.8% ± 2.5% 78 105 21.8% ± 2.4% 708 575 15.8% ± 1.2% 58 75 15.4% ± 2.2% 42 74 13.9% ± 1.8% 14 16 13.7% ± 2.0% 15 16 22.5% ± 3.3% 368 539 18.4% ± 1.2% 127 210 23.4% ± 2.9% 26 30 18.1% ± 2.4% 20 21 12.8% ± 2.3% 149 307 19.3% ± 1.7% 82 179 20.3% ± 2.1% 42 69 15.7% ± 2.0% 45 71 17.2% ± 2.1% 102 105 17.3% ± 2.3% 98 143 24.1% ± 2.8% 37 43 18.7% ± 1.9% 84 108 15.8% ± 2.1% 113 156 17.7% ± 2.0% 184 195 14.5% ± 1.6% 56 75 14.0% ± 2.2% 93 76 19.6% ± 2.7% 78 107 14.5% ± 2.1% 17 23 15.8% ± 2.3% 18 38 17.0% ± 2.4% 26 40 15.8% ± 2.3% 13 28 15.8% ± 2.0% 155 199 15.5% ± 1.6% 46 57 20.6% ± 2.9% 488 415 15.6% ± 1.2% 173 281 24.0% ± 2.1% 6 20 21.9% ± 2.4% 174 266 16.9% ± 1.6% 63 96 19.2% ± 2.4% 61 65 14.1% ± 2.2% 209 322 17.0% ± 1.4% 27 32 18.4% ± 1.9% 117 140 21.6% ± 2.3% 11 22 19.9% ± 2.2% 167 151 19.7% ± 2.6% 339 489 21.2% ± 1.7% 22 29 14.9% ± 2.8% CRS-4 Vermont Virginia Washington West Virginia Wisconsin Wyoming U.S. Total Total Number of Beneficiaries 85 917 748 346 766 65 Number Meeting Income Requirementa (A) 30 280 183 121 172 18 38,077 12,013 Of Those Meeting Income Beneficiaries Eligible for Requirement, Transitional Assistance Number with Percentage (with Disqualifying Rx Coverageb Number 90% confidence (A-B) intervals)c (B) 16 14 16.5% ± 2.2% 114 166 18.2% ± 2.4% 103 79 10.6% ± 2.0% 53 68 19.6% ± 2.0% 87 85 11.1% ± 1.7% 8 10 15.4% ± 2.3% 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.