NCPA - National Center for Policy Analysis

Pennsylvania's Experience Warns Against Medicare Prescription Drug Program

July 15, 2002

Pennsylvania's prescription dug program for the low-income elderly, the largest in the nation, has been plagued by skyrocketing costs and the state is searching for new sources of revenue. So far, it has depended on funds from the state lottery -- but those revenues have been flat.

The state's experience should send up warning flags to federal politicians contemplating a nationwide drug benefit program for the elderly under Medicare, analysts warn.

  • Established in 1984, Pennsylvania's program has experienced cost escalations averaging 13 percent a year since 1997 -- to $392.6 million in 2001.
  • Though enrollment has declined, the number of claims for each beneficiary and the amount paid on each claim have steadily increased.
  • The average number of prescriptions filled for each participant now exceeds 3.5 a month -- compared to just two in 1987.

Of the 10 million claims paid last year, 45 percent were for generic drugs.

State officials say that the heart of the problem is utilization -- people are simply using more and more drugs. The program, which has been called a model, charges patients only $6 per prescription and rarely denies coverage.

Source: Robert Pear, "Pennsylvania Struggles to Repair Model Prescription Aid Program," New York Times, July 13, 2002.

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