New Congressional Budget Office Findings Show Medicare Part D Continues to Hold the Line on Costs

New Congressional Budget Office Findings Show Medicare Part D Continues to Hold the Line on Costs

03.19.12 | By Greg Lopes

The latest Congressional Budget Office (CBO) spending estimates show, once again, that the Medicare prescription drug benefit's competitive, market-based structure is leading to much lower than expected overall program costs - while continuing to deliver medicines to seniors at affordable costs.

Seniors love it and it lowers costs: check out this infographic on Part D's success.

In its latest budget report, released last week, CBO reduced its Medicare Part D spending projection for years 2013 through 2022 by $107 billion. CBO has continually dropped its cost projections for Part D. In April 2011 CBO reduced its 10-year Part D spending projection by about $120 billion.

CBO is now projecting Part D is costing 43 percent below its original 2004 estimate.

Interestingly, CBO increased its projected spending for the rest of Medicare. Spending in Medicare Parts A and B are increasing while Part D is dramatically slowing. And, if not for Part D's savings, overall Medicare costs would be escalating. This is because CBO projected that overall Medicare spending will go down over the next 10 years by $7 billion, and pointedly said that the overall decrease is a result of the $107 billion reduction projected spending for coverage under Part D.

It should be noted that while the Medicare-wide reduction was driven entirely by Part D, that program comprises only 11 percent of overall program spending - it is dwarfed in size by the rest of Medicare.

Part D is a federal program that is far below original cost projections. The American taxpayer is saving money, and Part D enrollees are enjoying lower than expected monthly premiums - averaging $30 a month in 2012.

We believe these latest CBO estimates again signal that Part D is a program that should be used as a model for how health care programs can control costs and deliver high quality coverage.

Follow Greg on Twitter @GregAtPhRMA.

More On PhRMA — powered by PhRMApedia