MEDICARE PART D
MEDICARE PART D: OVERVIEW
• Part D provides prescription drug coverage for Medicare
• 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
PART D EXPANDED COVERAGE FOR SENIORS
In 2011, 90% of people with Medicare had comprehensive drug coverage.
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
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%
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
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
Average Beneficiary Premiums Far Below
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
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
• Such policies would be a step toward turning Medicare into
Medicaid and could undue a highly successful program for
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
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
• If R&D incentives diminish, so will the investment and with it the
jobs created by that investment.