Most Medicare Participants Receive Drug Coverage

April 16, 2003 ( - While the majority (78%) of Medicare beneficiaries have some form of prescription drug coverage, it is difficult to ascertain the adequacy of these programs.

That is due to Medicare participants receiving their coverage through various other forms of insurance. Although not all supplemental plans provide prescription drug coverage, according to the Medicare Beneficiaries Link to Drug Coverage report from the Joint Economic Committee’s (JEC) of the US Congress.

The report found that only 7% of Medicare participants are limited solely to traditional fee-for-service Medicare, which does not provide coverage for prescription drugs. Of those receiving additional coverage in 2000 (the latest year for which data is available), the most common were:

  • employer provided retiree coverage (34%)
  • medigap (24%)
  • Medicare+Choice (18%)
  • Medicaid (13%)
  • other (4%)

However, all supplemental plans are not created equal. At least 90% of beneficiaries with Medicare+Choice, employer coverage, Medicaid, or other insurance reported some type of drug coverage. However, only slightly more than half (53%) of Medigap recipients claimed to have the same.

Differences were noted across demographic lines, however not necessarily as expected. While the report found income does play a role in the level of coverage, it was not as much of an impact as might be expected. Evidence of this is the 77% of Medicare beneficiaries below the poverty line that had access to prescription drug coverage. In fact, coverage levels did not significantly decline until those in the “near-poor” strata, individuals earning between 100% and 175% of the poverty line, where coverage levels ranged from 71% to 73%.

More substantial differences were found between urban and rural participants. Overall, more than three-quarters of Medicare beneficiaries live in metropolitan areas and 81% have some form of drug coverage. Comparatively, only 67% of rural beneficiaries have drug coverage. Also, there is an inverse relationship between age and prescription coverage. For beneficiaries over the age of 65, coverage declines with advancing age, falling to 72% for those 85 and older.

JEC Conclusions

The JEC found that although the traditional Medicare program does not cover outpatient prescription drugs, the majority of Medicare beneficiaries already have coverage from other sources. Based on the research, the JEC offered Congress some considerations when undertaking Medicare reforms:

  • Be careful not to overly disrupt the existing market and the current means for delivering prescription drugs, and thereby threaten the drug coverage many seniors may currently enjoy.
  • Be aware of the various organizations, such as states and employers that already provide drug coverage to Medicare beneficiaries.

A copy of the full report is available at