Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Medicare Savings Programs are designed to provide financial assistance to Medicare beneficiaries with income and assets that may be too high to allow them to qualify for full Medicaid coverage. Depending on the beneficiary's income and assets, these joint federal-sate programs may pay for Part B and Part A premiums as well as cost-sharing. They range, in terms of assistance, from the Qualified Medicare Beneficiaries (QMB) program that pays premiums and cost-sharing to the Specified Low-Income Medicare Beneficiaries (SLMB) that only pays Part B premiums program to the Qualified Individuals (QI) program that also pays premiums, but is funded as a block grant and can limit the number of participants. Despite offering Medicare beneficiaries meaningful financial assistance, less than one-third of eligible persons sign up for the QMB program and only 13 percent enroll as SLMBs. In contrast, about two-thirds of people eligible for Medicaid enroll in the program. This is a critical time for these programs because there is an opportunity to coordinate them with the low-income drug subsidy offered through the Medicare Part D drug benefit. We analyze ways of making the programs work better by simplifying the eligibility requirements and aligning them with the low-income drug subsidy. We develop policy options that extend eligibility for the Medicare Savings Programs and the low-income drug subsidy to incomes as high as 200% FPL. This would be more consistent with eligibility cutoffs for programs such as SCHIP and state coverage expansions for the non-elderly population. We construct a comprehensive eligibility model to simulate baseline eligibility and examine the effect of eliminating the asset tests and considering automatic enrollment linked to the means-testing of Part B premiums. A 2005 NASI report by Mark Merlis used data from the 2001 panel of the Survey of Income and Program Participation (SIPP) to simulate eligibility for the Medicare Savings Programs. In this paper, we use 2006 data on a larger sample of Medicare beneficiaries that are available from the Health and Retirement Study. Compared to the 9,700 Medicare beneficiaries in the SIPP, the most recent wave of HRS includes more than 11,500 beneficiaries. Like the SIPP, the HRS has high quality data on income and assets and makes state identifiers available to researchers under a restricted data agreement. In the Merlis study, the impacts of changes in eligibility rules were considered within a program category. For example, Merlis considered what might occur if low-income Part D subsidy standards were aligned with a restructured Medicare Savings Program. Merlis showed that such a policy change would increase the share of beneficiaries in the Medicare Savings Programs from 8 percent to 19 percent. In this paper, we show how the 8 percent differs from the 19 percent along demographic and economic lines, including race/ethnicity, disability status, urban residence and marital status.