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"Illinois now can use federal Medicaid dollars to extend prescription drug coverage to some 368,000 seniors," Secretary Thompson said. "The state's innovative approach pools federal and state Medicaid dollars to help those seniors most in need. We also will make it easier financially and administratively for other states to quickly follow Illinois' lead."

In addition, Secretary Thompson announced a model demonstration application form, Pharmacy Plus, which will allow states to immediately expand Medicaid coverage for prescription drugs to Medicare beneficiaries and other individuals with family incomes up to 200 percent of the federal poverty level. With a streamlined application, available electronically, Pharmacy Plus will allow states to move quickly to implement effective programs expanding prescription drug benefits to low-income people.

President Bush and Secretary Thompson announced the demonstration's approval today while reaffirming the Bush administration's commitment to work to enact legislation this year to strengthen Medicare with prescription drug coverage, and to provide relief to seniors as quickly as possible. The President's fiscal year 2003 budget plan, scheduled to be released Feb. 4, would invest $77 billion over 10 years to help states pay to expand Medicaid drug coverage to low-income seniors.

"We look forward to working with members of Congress to enact a comprehensive Medicare drug benefit this year, but we also will act now so that strapped seniors without other drug coverage today won't have to wait for some relief," Secretary Thompson said.

Illinois' demonstration will allow low-income seniors to receive prescription drug coverage through Medicaid. Eligibility would be limited to individuals and families with incomes up to twice the federal poverty level ($23,220 for a family of two). Individuals could pay an annual enrollment fee of $5 or $25, depending on their income levels.

In Illinois, Medicaid would pay virtually all the costs of prescriptions up to a total of $1,750 each year, with enrollees responsible only for a nominal co-payment of $3 or less for each prescription. Medicaid would pay roughly 80 percent of the costs of additional prescriptions, with enrollees paying 20 percent plus the nominal co-payment.

The Illinois plan builds on an existing state-funded program that provided coverage to certain low-income seniors for specific chronic and catastrophic medications. Under the Medicaid waiver, low-income seniors will have access to all drugs covered by Medicaid -- not just specific ones, as under the state-funded plan -- and the federal government will share in the costs.

"Gov. George Ryan deserves credit for his efforts to improve access to affordable prescription drugs for Illinois seniors," Secretary Thompson said. "Both the Illinois waiver and our new Pharmacy Plus application will keep seniors healthier and help reduce their need for more expensive types of care."

Medicare is the federal program that covers 40 million seniors and people with disabilities. By law, Medicare does not cover most outpatient prescription drugs, leaving many seniors without access to affordable prescription drugs. Medicaid is a state and federal partnership that now provides health coverage, including prescription drugs, to about 40 million low-income Americans, including people with disabilities and older Americans living in nursing homes.

In August 2001, Secretary Thompson launched the Health Insurance Flexibility and Accountability (HIFA) Initiative to encourage states to expand access to health care coverage for low-income individuals through Medicaid and SCHIP demonstrations. The initiative gives states more flexibility to coordinate these companion programs and offers a simpler application for states that commit to reducing the number of people without health insurance.

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