Medicare: Part D a Success Story for Seniors

Since its inception, the Medicare prescription drug program has provided seniors unprecedented access to medicines at affordable prices.

Medicare Part D is designed to achieve cost savings through a competitive market of private prescription drug plans, all overseen by the Centers for Medicare and Medicaid Services. This approach has led to significant savings on medicines for Part D participants and a lower-than-expected overall cost for America’s taxpayers.

An important new study published in the Journal of the American Medical Association found that Part D saves Medicare beneficiaries about $1,200 per year in hospital, nursing home and other costs for each senior who previously lacked comprehensive prescription drug coverage. According to other experts, this finding resulted in more than $13 billion in savings in 2007, the first year of the benefit.

In addition, beneficiaries enrolled in a Part D drug plan are saving, on average, $1,200 annually on their medicines, CMS reports. Low-income seniors are saving an average of $4,000 a year. In fact, CMS recently estimated that the average monthly Part D premium for 2012 will be about $30 – slightly lower than the average premium amount in 2011 and 44 percent below initial projections.  

What’s more, the program is costing 41 percent less than initial 10-year projections, according to the Congressional Budget Office.

Clearly, Medicare Part D is a success story for seniors and American taxpayers, and the recent healthcare reform law has made the program even better.

For example, the Part D coverage gap, otherwise known as the “donut hole,” has been a burden for some seniors. As part of the new law, Part D participants who reach the coverage gap are receiving a 50 percent discount on the total cost of their brand-name medicines. Biopharmaceutical research companies are paying the discount, and beneficiaries receive it when they pay for their medicines at the pharmacy.

To date, over 1 million beneficiaries have received coverage gap discounts totaling around $660 million in savings, according to CMS. Individuals who received a discount saved an average of $517 each so far this year. 

The “donut hole” discount on brand-name medicines, combined with additional gap coverage contained in the law will fully close the gap by 2020.

These important improvements come as satisfaction rates among Part D beneficiaries are high. A recent survey by Medicare Today reported that 88 percent of seniors enrolled in Medicare Part D are satisfied with the program.  

For these reasons, Part D should be used as a model for reform rather than weakened by unsound policy proposals.

Resources

Journal of the American Medical Association study
This recently released study conducted by Harvard researchers found that improved access and adherence to medicines through Part D saves Medicare about $1,200 per year in hospital, skilled nursing facilities and other costs for each senior who previously lacked comprehensive prescription drug coverage. 

American Journal of Managed Care: State-Level Impacts of Medicare Part D
This article features a recent study by Harvard Medical School that shows nearly 11 million seniors gained comprehensive prescription drug coverage as a result of Medicare Part D.  This research, coupled with the recent research published in JAMA, shows overall savings to Medicare of $13.4 billion in 2007, the first full year of Part D.

Medicare Part D at Age Five
“Medicare Part D at Age Five: What Has Happened to Seniors’ Prescription Drug Prices?” shows that average costs for medicines frequently used by Part D beneficiaries have declined significantly since the implementation of the program.

Battelle Report on Economic Impact
The U.S. biopharmaceutical industry develops medicines that save, sustain and improve lives. Biopharmaceuticals is also well recognized as a dynamic and innovative business sector generating high-quality jobs and powering economic output and exports for the U.S. economy. This report quantifies this economic impact of the biopharmaceutical sector on the U.S. economy and jobs. Using input/output analysis, this report measures the direct and indirect impacts of the biopharmaceutical sector, and quantifies the economic impacts that would occur if biopharmaceutical revenues increase or decrease from significant changes in the business operating environment.

What Is Medicare Part D?
Medicare prescription drug coverage is insurance run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.

Medicare Plan Finder
This tool helps patients find coverage in their areas by entering no more than a ZIP code for a general plan search. Providing information such as name and Medicare number will yield more personalized search results.