2006 State Report > Economics > Prescription Drug Coverage
Economics: Prescription Drug Coverage
The typical older American takes an average of three prescription drugs, making rising drug prices a special concern for seniors. According to research from the AARP Public Policy Institute, the costs of 195 brand name drugs widely used by seniors have outpaced inflation every year between 2000 and 2004. The average annual increase in manufacturers' prices for these drugs rose from 4.1 percent in 2000 to 7.1 percent in 2004, while inflation dropped from 3.3 percent in 2000 to 2.7 percent in 2004.
Medicare law signed in December 2003 created a new benefit to help Medicare enrollees with their prescription drug costs. The first stage of the law began in June 2004, when Medicare prescription discount cards went into effect. The cards cost a maximum of thirty dollars. They were designed save cardholders between 10 and 15 percent on their total prescription drug costs. The cards offered extra assistance to low-income seniors (defined as seniors earning $12,569 a year for one person, or $16,862 for a married couple), who were eligible for $600 annual credits towards prescription drug costs in 2004 and 2005.
The Medicare drug discount cards phased out in May 2006. Beginning in January 2006, people with Medicare have been able to voluntarily join drug plans run by private companies. Under the new plan, Medicare beneficiaries will pay a monthly premium (approximately $37 in 2006), and also pay a share of prescription costs. The drug plans will vary in terms of cost, drug coverage, and pharmacy participation. Those with low incomes and limited assets will qualify for assistance in paying their monthly premium and/or some of the cost of their prescriptions. The first enrollment period for the new drug plans began November 15, 2005 and continued to May 15, 2006.
In 1999, South Carolina introduced the SilverCard, its own prescription drug discount program for low-income seniors aged 65 and older. The program was initially funded at 100% state dollars but later became a Medicaid Waiver funded at 70% Medicaid and 30% state funds. The SilverCard program served about 50,000 seniors in South Carolina in 2005, costing the state nearly $12 million a year. With the introduction of the Medicare prescription drug program, however, state officials changed the program as of January 1, 2006. Because the Medicare Part D program offers coverage to the SilverCard population, SilverCard is no longer a primary source of prescription drug coverage. The program instead serves to cover the gaps in the Medicare program for beneficiaries between 150% and 200% of poverty.