Impact of Medicare Part D on seniors' out-of-pocket expenditures on medications

Abstract

Background: Medicare Part D, introduced in January 2006, was intended to decrease beneficiaries' out-of-pocket expenditures on medications.

Methods: We examined whether this policy was successful in achieving this goal, including effects on Medicare beneficiaries without previous drug coverage and those who previously received coverage through Medicaid, in a longitudinal study of out-of-pocket expenditures on medications in 1504 Medicare beneficiaries 65 years and older participating in the 2005 and 2006 waves of the Medical Expenditure Panel Survey.

Results: Mean annual out-of-pocket expenditures on medications decreased by 32% ($320; 95% confidence interval [CI], $250-$391), from $1011 to $691, in the year after Part D was implemented for all Medicare beneficiaries in the Medical Expenditure Panel Survey. Mean annual out-of-pocket expenditures on medications decreased by 49% ($748; 95% CI, $600-$897), from $1533 to $784, in beneficiaries without previous drug coverage who enrolled in a Part D plan. Beneficiaries who did not enroll experienced a mean reduction of 32% ($353; 95% CI, $188-$518), from $1116 to $763. Mean annual out-of-pocket expenditures on medications remained similar in dual Medicare and Medicaid beneficiaries.

Conclusions: The introduction of Medicare Part D was associated with reductions in Medicare beneficiaries' out-of-pocket expenditures on medications, particularly in beneficiaries without previous drug coverage, and did not substantially change expenditures for Medicare beneficiaries who previously received pharmacy coverage through Medicaid. However, a question remains about whether the high public cost of providing pharmacy coverage through Medicare is worth the substantially lower financial benefit derived by beneficiaries.