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, a
nd the problem of adverse selection in individual insurance for prescr
iption drugs. It also discusses the issues that must be resolved in ch
oosing the direction public policy should take if more of the elderly
are to be covered and examines the advantages and disadvantages of fou
r illustrative public policy options, ranging from small expansions of
Medicaid benefits through ''Medigap'' regulation to Medicare coverage
for all elderly.