State Medicaid prescription drug expenditures for Medicare-Medicaid dual eligibles: estimates of Medicaid savings and federal expenditures resulting from expanded Medicare prescription coverage.

T here is widespread interest in providing expanded Medicare coverage for prescription drugs. In June and July 2002, the U.S. House approved a bill that would provide such coverage, and the Senate considered but did not approve several different Medicare drug coverage proposals. Medicare coverage of prescription drugs could produce major savings for Medicaid programs, which are jointly funded by state and federal governments and administered by states. Overall, Medicaid spent an estimated $16 billion in 2002 to provide prescription drug coverage to the six million low-income Medicare beneficiaries who also are eligible for Medicaid—the “dual eligibles.” States were responsible for nearly $7 billion of this spending.These dual eligibles account for nearly half of Medicaid’s total spending on prescription drugs for 47 million beneficiaries ($16 billion out of $33 billion in 2002). The average cost of drug coverage for a dual-eligible beneficiary is more than $2,800 a year, compared with $1,240 a year for all Medicaid beneficiaries. The Commonwealth Fund is a private foundation supporting independent research on health and social issues.The views presented here are those of the authors and should not be attributed to The Commonwealth Fund or its directors, officers, or staff, or to members of the Task Force on the Future of Health Insurance.