Notch Reform Bulletin: Notch Babies and Low-Income Seniors Squeezed

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Notch Reform Bulletin: Notch Babies and Low-Income Seniors Squeezed

Low-income seniors — including many Notch Babies — appear to be losing access to, or paying more for, their Medicaid benefits. In recent months, TSCL has heard from a number of you who no longer receive the level of state Medicaid benefits that you once did.

After growing a walloping 14% in 2002, Medicaid outlays rose by just 9% in 2003, marking the first decline in the program’s growth rate in seven years, according to the Congressional Budget Office (CBO). Dramatic declines in state revenues in recent years has put pressure on every state to enact Medicaid cost-cutting measures such as lowering income eligibility rules, requiring beneficiaries to pay more for their benefits, or dropping some benefits — such as dental care — altogether. The CBO recently projected an even lower spending growth of 8% for 2004 and only 3% in 2005, setting up a heated battle over affordable health care funding for low-income seniors.

Driving the most rapid growth in Medicaid costs is spending on prescription drugs. Nearly half of all that spending goes to seniors who are covered under both Medicare and Medicaid, individuals known as “dual eligibles.” TSCL believes that many Notch Babies, especially those who have little or no other income except for their Social Security, fall into the “dual eligible” category.

Starting in 2006, these dual eligibles will receive their drug benefits under Medicare instead of state Medicaid programs. For the next two years, however, states will continue to be under pressure to cut costs.

In order to save money, a growing number of states have announced plans to import cheaper drugs from Canada. Some of these plans are starting to draw threats of legal action from the Food and Drug Administration, which says that the practice is illegal. While TSCL continues to push for an end to the Notch inequity, we are also fighting for passage of legislation that would help states and others to import safe, less expensive drugs from Canada. TSCL believes drug importation would benefit some of our nation’s most needy seniors, including Notch Babies.

The drug industry is viciously fighting to protect its profits. Please contact your Members of Congress and ask them to support legislation that would allow the importation of less costly drugs from Canada.

Sources: “The Budget and Economic Outlook: 2005 to 2014,” The Congressional Budget Office, January 26, 2004. “Medicaid Spending: What Factors Contributed to the Growth Between 2000 and 2002?” John Holahan and Brian Bruen, Kaiser Commission on Medicaid and the Uninsured, September 2003.

May 2004