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New Medicare Drug Law Puts Lowest-Income Elderly at Risk

  • July 11th, 2005

A little-noticed provision of the new Medicare drug law will cause serious '” and perhaps irreparable '” harm to many of the lowest-income elderly and people with disabilities, according to a special report issued by the national consumer health organization Families USA.

Those most at risk of losing essential health care services are the 6.4 million low-income individuals who receive both Medicare and Medicaid, also known as 'dual eligibles.'

On January 1, 2006, when the new drug law takes effect, dual eligibles will begin receiving drug coverage through the Medicare drug benefit rather then through Medicaid. In order to help finance the new drug benefit, states are required to pay the federal government most of the savings that they would realize from no longer having to provide drugs to dual eligibles under their Medicaid programs. This provision is called the 'clawback' payment because the federal government is seen as 'clawing back' the savings that would otherwise have accrued to the states.

The only way states can reduce their clawback payments is by reducing the number of dual eligibles currently enrolled in Medicaid.

'The clawback formula creates a perverse incentive to cut the poorest of the poor off the Medicaid program because that is the only way states can reduce their payments to the federal government,' said Ron Pollack, Executive Director of Families USA. 'Unfortunately, this will threaten the health and well-being of the most vulnerable elderly and people with disabilities.'

Three states'”Florida, Mississippi, and Missouri'”have already announced plans to reduce or eliminate Medicaid coverage for some or all elderly enrollees and people with disabilities. It is estimated that 77,000 elderly or disabled beneficiaries will lose Medicaid coverage in Florida alone.

Although there is no way to predict which states will follow the lead of Florida, Mississippi, and Missouri in cutting enrollees, it is highly likely that other states will at least consider such cuts as they look for ways to reduce spending.

The people who will be hit hardest by the loss of Medicaid coverage are those who currently live at home or with their families, rather than those in long-term care facilities.

Click here for a copy of the report

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Last Modified: 07/11/2005

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