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Medicaid Cost Containment and Access to Prescription Drugs

State Efforts to Contain Medicaid Prescription Drug Costs Reduce Access

Media Advisory
May 12, 2005

Alwyn Cassil (202) 264-3484 or

Editor’s Note: To obtain an electronic copy of the article, news reporters may e-mail Alwyn Cassil.

ASHINGTON, D.C—More than one-fifth of all adult Medicaid enrollees in 2003 reported they couldn’t afford to get at least one prescription filled, according to a Center for Studying Health System Change (HSC) study published in the May/June edition of the journal Health Affairs.

Although all states offer prescription drug coverage for most Medicaid beneficiaries, 22 percent of Medicaid beneficiaries aged 18 and older said they couldn’t afford to get a prescription filled in the previous year, according to findings from HSC’s Community Tracking Study Household Survey, a nationally representative survey involving 46,600 people in 2003 and 60,000 people in 2001. Medicaid is the joint federal-state program that provides health care coverage to about 50 million low-income and disabled people of all ages.

The prescription drug access problems experienced by Medicaid beneficiaries are comparable to the uninsured—22 percent vs. 26 percent. In contrast, only about 9 percent of adults with employer-sponsored health coverage said they couldn’t afford a prescribed drug in the previous year.

"People with Medicaid coverage have virtually the same level of prescription drug access problems as people without any insurance coverage at all," said Peter J. Cunningham, Ph.D., the study’s author and a senior health researcher at HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

Although Medicaid cost-containment methods vary from state to state, the most common include imposing nominal copayments, setting dispensing limits that restrict the number of prescriptions, mandating substitution of generic drugs for brand-name drugs, requiring prior authorization for certain drugs and issuing step-therapy protocols that require physicians to try lower-cost drugs before prescribing more costly alternatives.

The proportion of Medicaid enrollees living in states with four or five cost-containment policies grew dramatically between 2001 and 2003 from 16 percent to 62 percent. Although states have intensified efforts to control rising Medicaid drug spending in recent years, the proportion of Medicaid beneficiaries reporting they couldn’t afford prescription drugs remained unchanged between 2001 and 2003, according to the study.

One possibility is that both health care providers and Medicaid patients became more knowledgeable about how the policies worked and were better able to navigate the system to get needed prescription drugs. States also may have gained more experience in using cost-containment policies, which may have reduced access problems.

Medicaid beneficiaries’ lower incomes and poorer health compound the problems they have affording prescription drugs and account for much of the difference in the rate of access problems compared with people with employer coverage.

More than half of Medicaid beneficiaries aged 18 and older have incomes below the federal poverty level, or $8,980 for a single person in 2003, while more than 80 percent have incomes below 200 percent of poverty. In comparison, 12 percent of all U.S. adults have incomes below poverty and about 30 percent have incomes below 200 percent of poverty.

More than 40 percent of Medicaid beneficiaries aged 18 and older reported they were in fair or poor health, compared with 17 percent of all U.S. adults. Medicaid beneficiaries also were almost twice as likely as all U.S. adults to have two or more chronic conditions—30 percent vs. 16 percent.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. For more information, contact Jon Gardner at Health Affairs at (301) 347-3930 or via e-mail at


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.