The Medicare Drug Benefit: Implications for California

Chiquita White. Jonathan Blum. and Ryan Padrez of The Health Strategies Consultancy


This is archived content; for historical reference only.

On January 1, 2006, the federal Medicare program began offering, for the first time, an outpatient prescription drug benefit to all Medicare beneficiaries. This is the most sweeping Medicare change in decades. The new benefit (Medicare Part D) is designed to lower the cost of prescription drugs for most senior and disabled Medicare beneficiaries. However, it presents a wide, and potentially confusing, array of options to California’s four million Medicare beneficiaries, including nearly one million low-income beneficiaries who have existing drug coverage through Medi-Cal. In addition, it creates significant operational and financial challenges for the state and county government agencies responsible for implementing key elements of the benefit.

In addition to providing an overview of the Medicare drug benefit, this issue brief highlights the special characteristics of California that will affect introduction of the benefit, and identifies numerous policy issues that state legislators and program officials must consider.

The issue brief includes a timeline of California Department of Health Services (DHS) tasks for successful implementation of the benefit, along with major milestones and deadlines for the federal Centers for Medicare and Medicaid Services (CMS), insurers who will offer the drug benefit, and Medicare beneficiaries.

The analysis concludes that the impact of the new drug benefit will be felt throughout the health care system in California. While there are still many unanswered questions about the drug benefit, lawmakers and program officials will have to make decisions quickly once new information becomes available in order to make the transition to the benefit as successful as possible, and to minimize adverse consequences, particularly for beneficiaries with dual-eligibility in both the Medicare and Medi-Cal programs.

The complete issue brief is available under Document Downloads.