MedicarePart D

A Success Story

Created in the Medicare Modernization Act (MMA) of 2003, and formally implemented in 2006, Medicare Part D provides affordable prescription drug coverage to seniors and people living with disabilities. As a result, Medicare Part D benefits patients and improves health. The program has been successful for both beneficiaries and taxpayers and works well thanks to robust competition and choice. Today, more than 40 million people benefit from Medicare Part D.

Part D Benefits Patients and Improves Health

By increasing access to needed medicines, Part D helps improve beneficiaries’ overall health and reduce the use of other costly and avoidable health care services, such as hospitalizations. For example, Part D coverage was linked to an 8 percent decrease in hospital admissions for seniors, according to a 2014 National Bureau of Economic Research study. Gaining Part D coverage also improved adherence among enrollees with congestive heart failure, which led to over $2.3 billion in annual savings to Medicare, driven by reductions in Parts A and B expenditures. Additionally, Medicare beneficiaries have enjoyed relatively stable average monthly Part D premiums (projected at $34 in 2017), which helps keep coverage affordable.



Part D is a Successful Program for Both Beneficiaries and Taxpayers

Part D has succeeded beyond expectations, delivering needed prescription medicines at a far lower cost than anticipated due to rigorous competition in the program and accounting for a comparatively small share of total Medicare spending. According to figures from the Congressional Budget Office, total program costs are $349 billion (or 45 percent) less than initial 2004-2013 projections. And in 2015, Part D represented just 11.8 percent of total Medicare spending. Another testament to Part D’s success: about 90 percent or more of beneficiaries are satisfied with the program.



Part D Works Well Thanks to Competition and Choice

The Part D program is unique in that private plans submit competitive bids each year to determine the cost of the benefit, rather than government-set pricing. Private Part D plans compete to deliver affordable coverage for beneficiaries while also providing value for taxpayers. Medicare Part D plans also negotiate significant discounts and rebates with drug manufacturers to achieve savings on medicines and use them to help reduce premiums, deductibles and cost-sharing for beneficiaries. This helps save money for both beneficiaries and taxpayers. For 2016, there are, on average, 26 Part D plan choices available in every region. This allows beneficiaries to choose a plan that best meets their individual coverage and financial needs and, in turn, they are better able to adhere to prescribed treatment regimens.