Dual Eligibles: Medicaid Expenditures for Prescription Drugs and Other Services

Publication Date: July 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

The term "dual eligibles" refers to individuals who qualify for both Medicare and Medicaid. Generally, persons qualify for Medicare if they or their spouse (or, in some cases, their parent) have worked and paid Medicare taxes, and they are either over age 65 or are a younger person with blindness or a disability. Persons qualify for Medicaid because they have limited income and resources and meet other federal and state requirements such as age or disability. In addition to qualifying for Medicare benefits, most dual eligibles also qualify for Medicaid services provided by the state. Medicaid covers certain services for most dual eligibles that Medicare does not cover including outpatient prescription drugs and long-term care.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173), enacted in December 2003, made several major changes to Medicare including adding a voluntary outpatient prescription drug benefit effective January 1, 2006. This new benefit will significantly change the prescription drug coverage of dual eligibles. To assist in understanding these changes, the purpose of this report is to provide background and information on the current prescription drug coverage of dual eligibles under Medicaid. It should be noted that the largest category of Medicaid spending for dual eligibles is long-term care including nursing facilities, home and community-based services, institutions for individuals with mental retardation, and other long-term care services ($49.0 billion, 69% of total spending for dual eligibles).

In FY2000, total Medicaid service spending was $168.1 billion. Of this amount, $70.8 billion (42%) was attributed to dual eligibles in payment for Medicaid covered benefits and in deductibles and coinsurance for Medicare services. An additional $4.2 billion in Medicaid expenditures were for Medicare premiums for dual eligibles. While Medicaid payments for dual eligibles represented a fairly large portion of total Medicaid expenditures, dual eligibles represented only 14.6% of all Medicaid beneficiaries.

Medicaid provides coverage for dual eligibles for many services not covered by Medicare including, at state option, outpatient prescription drugs. As of November 2002, all 50 states and the District of Columbia covered prescription drugs for at least some Medicaid beneficiaries. However, most states limited the quantity of the prescription that could be filled (e.g., 30-day supply), the total number of refills, or the total number of prescriptions within a given time period.

In FY2000, Medicaid paid for prescription drugs for 76% of dual eligibles totaling $10.7 billion. The average per-capita prescription drug payment for dual eligibles was $2,249. The percentage of dual eligibles who had Medicaid prescription drug costs ranged, in most states, between 70 and 90%. This report will be updated as needed.