An assessment of Medicare Part D after two years

OBJECTIVE: To assess the broad impacts of Medicare Part D and the extent to which prior concerns have been realized. METHODS: We used administrative data to summarize beneficiary enrollment and plan participation in Part D, and compared pharmaceutical use and out-of-pocket spending before and after the introduction of Part D. We characterized the benefit designs of the 10 largest Part D plans in 2006 and compared them with the benefit designs of 7 non-Part D plans often cited as examples of low-cost or comprehensive drug benefits. RESULTS: By 2008, nearly 90% of seniors had drug coverage at least as generous as the standard Part D benefit. Excluding premiums, annual out-of-pocket spending in the 10 largest Part D plans was comparable to that of other private and public drug benefits, with the most prominent differences attributable to out-of-pocket spending on drugs not covered in the plan. Poorer beneficiaries have gained the most from Part D in terms of increased access to medications and reduced out-of-pocket spending. CONCLUSIONS: Coverage under Part D is comparable to that under non-Part D plans with respect to key features that are likely to be important to Medicare beneficiaries--access to medications and out-of-pocket costs. Nonetheless, concerns remain over drug pricing and gaps in coverage. The government should continue to monitor the competitiveness of the Part D market to ensure it meets the diverse needs of Medicare beneficiaries. (August 2009)