Increasing participation in the Medicare savings programs and the low-income drug subsidy Joan Sokolovsky and Hannah Neprash November 8, 2007
Key findings Medicare beneficiaries typically have lower incomes and higher out- of-pocket health care costs than the rest of the population Increasing participation in programs that provide help to beneficiaries with limited incomes has proven difficult Targeted outreach and administrative simplification can be effective strategies 2
2006 Person-level median income $30,000 Income (Dollars) $25,000 $20,000 $15,000 $10,000 $5,000 $28,077 Difference = $11,032 $17,045 $0 Under 65 65+ Source: U.S. Bureau of the Census, Current Population Survey, Annual Social and Economic Supplement. 2007. 3
Income distribution for individuals above and below 65 years 40% 35% 2006 poverty threshold ($9,669) for individuals aged 65 and older 30% 25% 20% 15% Under 65 65+ 10% 5% 0% $0-$9 $10-$19 $20-$29 $30-$39 $40-$49 $50-$59 $60-$69 $70-$79 $80-$89 $90-$99 $100+ Annual income (in thousands) Source: U.S. Bureau of the Census, Current Population Survey, Annual Social and Economic Supplement. 2007. 4
Percentage of Medicare eligibles receiving income from specified source in 2004 Percent of beneficiaries receiving income 100 90 80 70 60 50 40 30 20 10 0 89 Social Security 55 Asset incom e 41 Retirem ent benefits other than Social Security 24 Employment Earnings 4 Public assistance 4 Veterans' benefits Source: Income of the Aged Chartbook 2004. Social Security Administration. 5
Median out-of-pocket health care spending as a percent of income for one-person households, 1998-2003 OOP as a percent of income 14 12 10 8 6 4 2 0 12.5 11.7 12.1 11.7 11.6 10.5 9.6 9.7 9.1 9.1 8.4 8.8 1.8 1.9 2 1.9 1.8 2.2 1.6 1.5 1.7 1.5 1.5 1.7 1998 1999 2000 2001 2002 2003 Year Age 65+, total OOP Age 65+, excluding Rx Under 65, total OOP Under 65, excluding Rx Source: Federman et al. 2005. Avoidance of Health Care Services Because of Cost: Impact of the Medicare Savings Program. Health Affairs. 6
MSP enrollment reduces health care avoidance High out-of-pocket health care costs may motivate Medicare beneficiaries, especially those near the poverty line, to avoid necessary health care Overall self-reported rates of avoidance among low-income seniors were: 30.9 percent for physician visits 20.7 percent for hospital visits 26.0 percent for prescription filling QMB enrollees were half as likely as non-enrollees to report physician avoidance 7
Why don t more beneficiaries participate in these programs? Lack of awareness of the programs Complexity of the application and enrollment processes Reluctance to go to state Medicaid offices because of perceived welfare stigma 8
Efforts to increase participation have achieved limited but substantial results One initiative gave 5 states up to $450,000 over a 3 year period to boost enrollment Successful efforts targeted individuals and provided specific information on how and where to get help with enrollment process Projects included contacting participants in other programs, using data from SSA to identify and recruit participants 9
SHIPs have limited resources to counsel beneficiaries SHIPs could use additional money to: train local volunteers on program eligibility purchase computer laptops to submit beneficiary applications from homes, churches, and other community sites provide written materials and translators for beneficiaries who are not English-speakers provide more rural outreach 10
Eligibility criteria for MSP programs MSP program QMB SLMB QI Income limit <100% of poverty 100-120% of poverty 120-135% of poverty Covered costs and services Medicare premiums & cost-sharing Medicare premiums Medicare premiums Note: All MSP programs have an asset limit of $4,000/$6,000 per individual/couple 11
Eligibility criteria for low-income drug subsidy (LIS) Beneficiary category Income Asset limit, 2007 Covered costs and services Full subsidy <135% of poverty $7,620/ $12,190 No premium, deductible, $2.15- $5.35 copays, no copays after drug spending reaches $5,100 Limited subsidy <150% of poverty $11,710/ $23,410 Sliding scale (25-100% of lowincome benchmark premium), $53 deductible, 15% coinsurance, $2.15-5.35 copay after drug spending reaches $5,100 Dual eligibles, QMB, SLMB, QI Deemed eligible Deemed eligible No premium, deductible, $2.15- $5.35 copays, no copays after drug spending reaches $5,400 12
Simplifying MSP enrollment The Congress set income and asset criteria for LIS at a higher level than MSP MSP asset criteria have not been revised since 1989 when the first program was established Many states have used their authority to effectively raise MSP income or asset levels 13
The role of SSA SSA is responsible for determining LIS eligibility for those individuals who apply for the subsidy Beneficiaries can apply for LIS without facing possible stigma associated with applying at a Medicaid office If MSP and LIS eligibility were based on same criteria, SSA could screen and enroll beneficiaries for both programs at the same time 14