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					MEDICARE PART D
     July 2011
          MEDICARE PART D: OVERVIEW



• Part D provides prescription drug coverage for Medicare
  beneficiaries.

• Prescription drug plans compete to deliver coverage for
  beneficiaries and value for taxpayers.

• Part D differs from other public drug programs in that prices are
  not set administratively, but through a competitive bidding
  system.
PART D EXPANDED COVERAGE FOR SENIORS

In 2011, 90% of people with Medicare had comprehensive drug coverage.
           Medicare Beneficiaries




                                    50
                                    45
                                    40
                                    35                                           42M
                                    30
                                    25
                                                                                (90%)
                                    20                24M
                                    15               (59%)
                                    10
                                     5
                                     0
                                                 2005                    2011

                                     Has Comprehensive Drug Coverage   No Comprehensive Drug Coverage
           SOURCES OF DRUG COVERAGE FOR THE
                ELDERLY AND DISABLED

In 2010, about 28 million Medicare beneficiaries were enrolled in Part D plans.

                            Prescription Drug Coverage Among Medicare Beneficiaries, 2010
                                          No Drug Coverage




  VA, Indian Health Service, Medigap, Other1

                                                                                         Stand-Alone Part D




      Employer/Union Retiree Coverage2




                                                             Medicare Advantage Part D
   PART D IMPROVES ACCESS, SAVES MONEY

Peer-reviewed and academic literature confirms Medicare Part D substantially
reduced out-of-pocket costs and increased access to medicine for seniors.
       PART D HELPS LOW INCOME ENROLLEES

The average low income subsidy enrollee saves $4,000/year on prescription drugs.

                       Part D Average Savings per Enrollee, 2007 and 2011
                                                                                    $4,000


          4000                                        $3,350

          3500

          3000

          2500

          2000
                             $1,200
          1500

          1000

           500

             0
                 2007, All Enrollees   2007, Low Income Enrollees   2011, Low Income Enrollees
        COVERAGE GAP WILL CLOSE BY 2020
Under the Affordable Care Act, beneficiaries are eligible for a 50% discount on
branded drugs while in the coverage gap. The gap begins phasing out in 2011.
     “Cost-sharing in the coverage gap will be reduced each year until beneficiaries are required
       to pay only 25 percent of the costs of covered Part D drugs in 2020 and beyond.” - HHS
        STEADY SATISFACTION WITH PART D
Eighty-four percent of Part D enrollees are satisfied with their Part D coverage.

          “Overall, how satisfied are you with your prescription drug coverage?”

                                    89%      90%               88%
                  83%                                 84%              84%
                           81%
          78%




                                                                                     Very
                                                                                   Satisfied



                                                                                   Somewhat
                                                                                    Satisfied
    SATISFACTION WITH PART D IS MOST HIGH
           AMONG THE VULNERABLE
Compared to other subgroups, dual eligibles exhibit the highest satisfaction rate
with their drug coverage – 93% compared with 84% among all Part D enrollees.
PART D IS COSTING FAR LESS THAN INITIALLY
                EXPECTED
Total Part D costs are 41 percent lower than the initial 10-year cost estimate, in
part due to better negotiations by plans.

                        CBO Projections and Tallies of Total Part D
                           Spending for 2004-2013, in Billions



                                                 $322.2B Less
      Average Beneficiary Premiums Far Below
                Original Estimates
According to the CMS Administrator, “[t]hese very modest increases in premiums
… are going to make medications more affordable to Medicare beneficiaries.”
      Part D Is The Smallest Share of Medicare
                    Expenditures

Medicare Part D will make up 11.4% of estimated Medicare expenditures in 2011.


           Part A 48.3%




                                                               Part B 40.3%




             Part D 11.4%
         Proposed Policy Changes Threaten
                Success of Part D


•   Recently, a number of policy changes proposed by both
    Congress and the Administration have suggested imposing price
    controls in the form of Medicaid-style rebates on prescriptions in
    Part D.


•   Such policies would be a step toward turning Medicare into
    Medicaid and could undue a highly successful program for
    beneficiaries.
Imposing Medicaid-like price controls on Medicare
   Part D could restrict access to medicines.

•   Currently, all Medicare beneficiaries have the same access to
    Medicare benefits. Treating dual eligible beneficiaries (those who
    qualify for both Medicare and Medicaid) differently for the purpose of
    drug pricing, would undermine this principle and open the door for
    Medicaid-like restrictions that can be harmful to beneficiaries. Unlike
    Medicare, under Medicaid, states have full authority to determine the
    “amount, duration, and scope” of benefits. Many states currently
    impose limits on the number of allowed prescriptions per month.

•   All Part D enrollees may change plans on an annual basis in order to
    maintain prescription drug coverage that fits their cost and coverage
    needs, and those who are dually eligible may change plans at any
    time, unlike Medicaid where enrollees are typically restricted to the
    state’s preferred drug list (PDL).
Setting Medicaid as the benchmark for Medicare
could open the door to cuts in Medicare payment
           for other health services.



•   Medicaid’s hospital reimbursement rates reportedly have been
    below costs for many years. Benchmarking Medicare hospital
    rates to Medicaid’s would exert additional financial pressure on
    hospitals to shift costs to other

•   (this slide may be cut by policy)
Imposing Medicaid Rebates on Part D Would Chill
   Research on Diseases Disproportionately
       Affecting Medicare Beneficiaries



 •   According to CBO, price controls on Part D prescription drugs
     “would reduce manufacturers’ incentives to invest in R&D on
     products that would be expected to have significant Medicare
     sales.”
Imposing Price Controls on Medicare would stifle
  economic growth in the biopharmaceutical
       sector and supporting businesses



 •   America’s biopharmaceutical research companies invested a
     record $67.4 billion last year in R&D of new life-changing
     medicines and vaccines – an increase of $1.5 billion from
     2009.

 •   If R&D incentives diminish, so will the investment and with it the
     jobs created by that investment.

				
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posted:9/8/2011
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