SeniorCare to Lose Federal Funding

By Christopher Lee
Washington Post Staff Writer
Tuesday, April 10, 2007

The program created by Wisconsin five years ago to help low-income seniors get prescription drugs serves 104,000 people and, state officials say, has saved the federal government $669 million in Medicaid costs.

That is why Gov. Jim Doyle (D) and seniors advocates were more than disappointed last week when the Centers for Medicare and Medicaid Services decided to pull the plug on federal funding for SeniorCare after June 30.

"The Bush administration is making a terrible mistake," Doyle said in a statement after learning of the decision from acting CMS Administrator Leslie V. Norwalk. "As a result, Wisconsin seniors will pay more and get less coverage, while drug companies make even larger profits. Our state won't be allowed to negotiate better prices on behalf of our seniors as we do now."

In an interview, Norwalk disputed Doyle's contention that participants would be worse off, saying that many, with the state's help, could get comparable coverage under the new Medicare drug benefit. That benefit, known as Medicare Part D, did not exist when the SeniorCare program was created with federal permission in 2002. She also said Wisconsin officials have not offered data showing that SeniorCare saves the federal government money, a requirement of the "waiver" under which it was created in 2002.

"It isn't clear that it saved Medicaid any money," Norwalk said. "They did not show that analysis. They just put out the numbers. . . . Consequently, we are not going to extend the program. But I totally appreciate that seniors in Wisconsin are concerned, and I want to do all that we can at CMS to make sure that we work with the state to make sure that seniors are no worse off than they are today."

SeniorCare, open to Wisconsin residents 65 and older, covered $253 million in drug costs last year, the state says. It serves people with annual incomes below 240 percent of the federal poverty level, or $24,505 for individuals and $32,857 for couples. Unlike Part D or Medicaid, the federal health program for the poor, SeniorCare does not take into account how much a person has in assets, such as stocks or bank account savings.

Seniors pay a $30 annual enrollment fee, $5 for each covered generic prescription drug and $15 for brand-name drugs. Participants pay annual deductibles of $500 or $850, depending on income, although those with the lowest incomes -- less than $16,336 a year for individuals and $21,904 for couples -- pay no deductible. The program gets discounted drug prices under Medicaid, and state officials negotiate further rebates.

The idea is that seniors will stay healthier and be less likely to end up in hospitals or nursing homes at government expense.

"It's easy to use, it's easy to apply for," said Lisa Lamkins, advocacy director for AARP Wisconsin. "This has been one of the most popular programs in the state."

Wisconsin's seniors alternatively may enroll in the Medicare drug benefit, which began in 2006. Under the program, private insurers negotiate prices with drug companies as they compete to attract Medicare beneficiaries.

Under the standard plan, beneficiaries pay monthly premiums and a $265 annual deductible before the plan picks up 75 percent of prescription costs. Coverage stops after the beneficiary and the plan have paid $2,400 in total drug costs and resumes after the senior has paid $3,850 out of pocket, a gap known as the "doughnut hole." (SeniorCare has no such gap.) Beneficiaries can choose plans with no gap, lower premiums or a wider selection of drugs.

The federal government provides subsidies to low-income beneficiaries -- those with incomes lower than $15,315 a year and less than $11,710 in assets -- that eliminate the coverage gap and often the monthly premiums as well.

Democrats in Washington say that Part D prices would be lower if the federal government negotiated with drugmakers, a conclusion Bush officials reject. The House has passed legislation requiring such negotiations, and a Senate committee may vote on a similar bill this week.

Norwalk said Wisconsin should join 21 other states in creating supplemental "wraparound" coverage for Part D, diverting the state money now spent on SeniorCare to fund more generous Medicare drug benefits for lower-income seniors. At least three other states -- Florida, Illinois and South Carolina -- that had programs similar to SeniorCare have done so, she said.

The lack of an asset test in SeniorCare is a big problem, Norwalk said, because it is impossible to discern how much the program is saving without knowing how many participants would otherwise have ended up on Medicaid.

"I don't know whether or not these people would ever qualify for Medicaid," she said. "All they have done basically is shift costs to the Medicaid program that should not be borne there."

In fact, Wisconsin experienced higher-than-expected Medicaid enrollment during the waiver period, Norwalk said, which cost CMS $100 million over the past five years.

State officials are considering a wraparound, but say it makes no sense to abandon a program that is projected to save CMS more than $400 million over the next three years. The federal government pays $617 a year, on average, to subsidize someone on SeniorCare, compared with nearly $1,200 a year for someone with Part D coverage, said Jason Helgerson, Wisconsin's Medicaid director.

"What should be the question is, 'What's the most cost-effective way to get seniors a drug benefit that keeps them out of nursing homes?' " Helgerson said. "We think the empirical evidence is extremely clear that SeniorCare is more cost-effective than Part D, and for the simple reason that we negotiate with the drug companies and the federal government doesn't."

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