In recent years, coverage  through these sources has become more expensive and less widely  available. According to a recent survey, in the fall of 1999, nearly two-thirds of  Medicare beneficiaries had some form of drug coverage from a  supplemental insurance policy, health plan, or public program. Employer-sponsored health plans provide drug coverage to the largest  segment of the Medicare population with coverage. However, there are  signs that this coverage is eroding. The drug benefits the plans do offer have become  less generous, increasing enrollees’ out-of-pocket costs and limiting their  total drug coverage. The  difference in expenditures and use between the two groups suggests that  the lack of drug coverage may impose barriers to health care. Bleak Outlook for Medicare’s Long-Term Sustainability Increases Urgency for Program Reform

Without meaningful reform, the long-term financial outlook for Medicare  is bleak. Although the leading prescription drug coverage proposals share certain  key design features, they differ in important details, such as the amount of  required cost sharing and the limit on beneficiary out-of-pocket costs. Expanding access to prescription drugs could ease the significant financial  burden some Medicare beneficiaries face because of outpatient drug costs.
What GAO Found

The lack of outpatient prescription drug coverage may leave Medicare's most vulnerable beneficiaries with high out-of-pocket costs. Recent estimates suggest that, at any given time, more than a third of Medicare beneficiaries lack prescription drug coverage. The rest have some coverage through various sources--most commonly employer-sponsored health plans. Recent evidence indicates that this coverage is beginning to erode. The short- and long-term cost pressures facing Medicare will require substantial financing and programmatic reforms to put future Medicare on a sustainable footing. In the absence of a drug benefit, many Medicare beneficiaries obtain coverage through health plans, public programs, and the Medigap insurance market. The price, availability, and level of such coverage varies widely, leaving substantial gaps and exposure to high out-of-pocket costs for thousands. Despite pressures to adopt a prescription drug benefit, the rapidly rising cost of current obligations argues for careful deliberation and extreme caution in expanding benefits. GAO's long-term simulations show that the aging of the baby boomers and rising per capita health care spending will, absent meaningful reform, lead to massive fiscal challenges in future years.