The legislative changes made under the Affordable Care Act are significant for Medicaid – the state program that provides health insurance for low-income individuals. In 2010, 16.5% of Americans had Medicaid coverage, but from 2014 it is being expanded to include every individual with incomes under 133% of the Federal Poverty Level who isn’t covered by Medicare. This removes the previous requirement for dependent children for eligibility. The Center for Medicare and Medicaid Services (CMS) is a federal body that monitors the Medicaid program, but states retain the right to choose to provide the program or not. Currently, all states have it. However, only 23 states and the district of Columbia will be participating in the Medicaid expansion, which a High Court Ruling deemed optional according to the constitution. Those states with Republican Governors are those that so far refuse to enact the legislation.
All states cover prescription drugs under Medicaid, though co-payments per prescription can vary between $0.50-$5.00, and there may be limits on the number of prescriptions a beneficiary can have filled each month/year. Furthermore, drug manufacturers must enter a rebate agreement with Medicaid in order to have their products covered. Details of how much is required for each drug can be found here. Under Obamacare, this rebate has risen from 15.1% to 23.1% of the average manufacturer price for innovator drugs, and is expanded to include Medicaid delivered by Managed Care Organizations.
This means not only is Medicaid expanding in terms of number of people covered, but the costs on pharma for each individual sale are rising too. Those listed as “preferred drugs” such as antiretrovirals, atypical antipsychotics, ARBs, statins, anti-platelets etc will be most affected. Pharma is prevented for offsetting this rebate rise with a price increase, as any price increases to offset will be offset themselves by an additional rebate. Currently, 600 drug manufacturers participate in this program, facilitating access to their medications for Americans on Medicaid. These companies will still benefit from the overall increase in sales expected from having more people covered under Medicare.
Sinclair, A et al (2010) Strategic Analysis – US Pharmaceutical Market Overview, Reference number: DMHC2621, Datamonitor
DeNavas-Walt, C, Proctor, BD and Smith, JC (2012) “Income, Poverty, and Health Insurance Coverage in the United States: 2011” U.S. Census Bureau, Current Population Reports, P60-243, U.S. Government Printing Office, Washington, DC
Schlosberg, C & Jerath, S (1999) Fact Sheet: Prescription Drug Coverage Under Medicare NHelp Available from: http://www.healthlaw.org/index.php?option=com_content&view=article&id=187%3Afact-sheet-prescription-drug-coverage-under-medicaid&catid=38&Itemid=192