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FYI: The Medicare prescription drug benefit created by Congress in November will not save the city much money, and leaves New Yorkers paying significantly more for their drugs than other states, according to an Independent Budget Office report. In addition to creating a drug benefit for all Medicare enrollees, the new structure (which will take effect in 2006) administratively shifts the drug costs for people who qualify for both Medicaid and Medicare from the state to the federally funded Medicare program. But states still pay most of the actual bill for those “dual eligibles,” through reimbursements to the feds at a rate based on the amount they are currently spending on drugs. Since New York’s existing Medicaid drug benefit is more expansive than the average state, its reimbursement will be much higher than average, even though New Yorkers will now get the same level of benefits. Because of the reimbursements, New York will only save $38.5 million in 2006 (assuming the current rate of drug cost growth), increasing to $429.8 million in 2015. [1/22/03]

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