Notch Bulletin—Notch Babies Spend Greater Share of Income on Prescription Drugs

Send this article to a friend.

Printer friendly version.

Notch Bulletin—Notch Babies Spend Greater Share of Income on Prescription Drugs

Seniors spent 26% of their incomes on health care in 2000, says a study by the Employees Benefit Research Institute. According to the Journal of the American Medical Association, 90% of all seniors take one prescription drug, and 40% take at least five prescription drugs, weekly. Little wonder the Congressional Budget Office estimates that the average Medicare recipient is likely to use about $2,440 worth of prescription drugs in 2003. While these statistics are sobering, the percentage of out-of-pocket income that Notch Babies must spend on prescription drugs and health care is far “above average.”

According to analysis by Advisor editor Mary Johnson, Notch Babies who retired in 1984 with average benefits and with no other source of income than Social Security, may spend about 26% of their benefits just on prescription drugs alone. And that doesn’t count what they must spend on Medicare and supplemental insurance premiums, deductibles and co-insurance costs.

Notch Babies or seniors born from 1917 through 1926, are now ages 77 through 86. According to the most recent Census data, about 20% of that age group are living at or near the poverty line which is about $9,000 for individuals and $12,000 for couples. They have more health problems than younger seniors do and many of them require multiple prescription drugs daily.

Prescription drug legislation moving through Congress contains special provisions for low-income beneficiaries that may be of particular benefit for many Notch Babies. The legislation would provide additional assistance for Medicare drug coverage for seniors with incomes slightly more than the poverty level. In addition low-income seniors would make only a $5 copayment.

TSCL supports these efforts to provide this valuable benefit, but concerns about the details remain. We are working with Members of Congress to ensure that Notch Babies who already receive drug benefits either through former employers’ health plans or through state Medicaid programs will not lose access to coverage they already have if they prefer to keep it. In addition, it remains to be seen whether insurers will actually offer the drug coverage as Congress envisions.

Sources: “Retiree Health Benefits: Savings Needed to Fund Health Care in Retirement,” Paul Fronstin and Dallas Salisbury, Employee Benefit Research Institute, February 2003, pg.10.

September 2003