Abstract
This paper examines the elderly's need for prescription drug insurance, the extent and depth of current coverage supplementary to Medicare, the characteristics of those who have coverage and those who do not, and the problem of adverse selection in individual insurance for prescription drugs. It also discusses the issues that must be resolved in choosing the direction public policy should take if more of the elderly are to be covered and examines the advantages and disadvantages of four illustrative public policy options, ranging from small expansions of Medicaid benefits through "Medigap" regulation to Medicare coverage for all elderly.

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