Wisconsin Unveils New Rx Drug Subsidy Program

Published July 1, 2007

On May 9 Wisconsin Gov. Jim Doyle (D) announced WisconsinCare, a new health initiative to replace the state’s embattled SeniorCare program. The new program will become effective January 1, 2008, and all SeniorCare participants will automatically be eligible.

Like its predecessor, WisconsinCare will provide enrollees with prescription drugs, but participants will have to choose their drug coverage from a Medicare Part D plan. SeniorCare–the state’s prescription drug program, partly funded by the federal government–included bigger government subsidies than Medicare Part D and was enormously popular among the state’s seniors due to its ease of access and low cost.

“WisconsinCare will provide seniors and people with disabilities access to life-saving prescription drugs at a price they can afford,” Doyle said at a May 9 press conference. “By filling donut holes [i.e., coverage gaps], using one-page applications, and providing access to affordable prescription drugs, WisconsinCare will protect our seniors–our greatest generation, who ask very little of their government and deserve so much in return.”

Federal Program

As the federal ball has been rolling on Medicare Part D, Doyle, Sen. Russ Feingold (D), and other Wisconsin politicians had been asking the U.S. Department of Health and Human Services (HHS) to extend SeniorCare for almost two years. Though HHS agreed in October 2005 to keep SeniorCare going, unchanged, until June 2007, requests for further extensions were denied in April, effectively ending the program.

Supporters tried to extend SeniorCare by including language as a rider on the Iraq War Supplemental budget bill in an effort to maintain pressure on the administration and HHS to take a longer-term look at the program. President George W. Bush, however, vetoed the war bill on May 2.

Ashley Glacel, press secretary for the Senate Special Committee on Aging, said SeniorCare differs from Medicare Part D in that it has no asset test and helps a large number of low-income seniors who now face higher costs and less-comprehensive coverage than they enjoyed under SeniorCare.

“It certainly affect[s] their quality of life and health,” Glacel said. “It [is] life-altering.”

Effective Program

Not only did the vast majority of SeniorCare members receive more comprehensive coverage than is available under Medicare Part D, but the cost of those drugs was lower because SeniorCare operated under a Medicaid waiver that enabled the state to negotiate with suppliers for lower prices on prescription drugs.

Though other states ran programs under similar waivers, they were either terminated or transformed into wraparound programs when Medicare Part D began, Glacel said. Wisconsin was the last holdout.

In a March 2 letter to HHS Secretary Michael Leavitt, several Wisconsin politicians wrote, “The SeniorCare waiver has consistently achieved budget neutrality and has, in fact, saved $669 million in Medicaid funding. These savings are the direct result of reduced Medicaid payments for hospital and nursing home care because seniors with SeniorCare prescription drug coverage have stayed healthier longer.”

SeniorCare’s key element lowers the average annual cost of participation in the program to $617, versus $1,174 for a Part D enrollee–significant savings to both taxpayers and the federal government, the letter said.

Higher Prices

“SeniorCare is everything that a government program should be,” said Rep. Tammy Baldwin (D-WI), who signed the letter. “It’s effective, cost-saving, uncomplicated, and popular. I hope the Bush administration will ultimately reverse its decision to end this highly valued, money-saving program.”

George Lightbourn, a senior fellow at the Wisconsin Policy Research Institute, a free-market think tank, said eliminating SeniorCare is a “move backward, away from free-market principles.”

“It is troubling that the prime reason to disallow the continuation of Senior Care is that Wisconsin stands as the last state not fully participating in Medicare Part D,” Lightbourn explained. “It has historically been beneficial to allow states to experiment with the delivery of programs to meet their unique local characteristics. One-size-fits-all approaches to health care policy seem to be a precursor to a standardized approach to the provision of health care.”

Though SeniorCare and Medicare Part D share many characteristics, such as age thresholds and care deductibles, SeniorCare is very popular with seniors in Wisconsin largely because it is more straightforward than Medicare Part D, Lightbourn said.

“There are even a number of people who signed up for SeniorCare knowing they were probably not eligible for benefits because they understand the program’s parameters,” Lightbourn said. “In that sense, SeniorCare is more transparent than Medicare Part D. [Transparency] is always helpful in ensuring well operating health care markets.”

David Salvo ([email protected]) writes from Indiana.

For more information …

Letter to HHS Secretary Mike Leavitt, http://feingold.senate.gov/pdf/ltr_030207_Leavitt_SeniorCare.pdf.