Pharmacy Plus Waivers: Trade Offs Between Expanding Rx Coverage and Global Caps in Medicaid

The Kaiser Commission on Medicaid and the Uninsured has been monitoring the development of the Pharmacy Plus waiver initiated by the Bush Administration in 2002 and tracking the states that have pending or approved plans. The Commission has developed some materials describing the initiative, examining the financing mechanism, and discussing the implications for the Medicaid program and participating states.

The Pharmacy Plus initiative allows states to secure federal Medicaid matching funds for prescription programs for low-income seniors and/or individuals with disabilities. While much of the focus of the initiative has been on providing prescription drug coverage, the waiver would fundamentally change the financing of care under Medicaid. The main findings of the new reports are:

  • Funding caps apply to all spending on elderly Medicaid beneficiaries, not just their Pharmacy Plus prescription programs.
  • A function of closed negotiations between states and the Department of Health and Human Services, the generosity of the waiver funding caps varies markedly across states. For example, South Carolina would have been eligible for $900 million more in federal funding over the next five years if it had gotten a deal as generous as Illinois, while Florida would have been eligible for $760 million and Wisconsin $350 million.
  • It is unlikely that prescription drug programs for seniors will pay for themselves.

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