What Is the Economic Impact of Medicare Plan D?
In 2006, a component of Medicare to provide prescription drug coverage for the nation's elderly took effect. The new benefit, known as Medicare Part D, represented a huge expansion of the U.S. healthcare program for senior citizens. Studies by the New England Journal of Medicine and the National Bureau of Economic Research suggest that Medicare Part D has had some positive effects, such as making prescriptions easier to afford.-
Features
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Economist Daniel McFadden, the 2000 Nobel laureate in economics, described Medicare Part D's organization as a market that allowed senior citizens to choose from various prescription drug plans offered by competing insurers.
Effects
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The New England Journal of Medicine reported in 2009 that Medicare Part D extended prescription coverage to many seniors who previously had no such coverage. This made expensive prescription medicines more affordable. The journal reported that seniors spent more on prescriptions and less on other medical services, such as physicians' visits and hospitalizations. A 2008 study by the University of Maryland and the National Bureau of Economic Research suggested that Medicare Part D helped lower pharmaceutical prices for Medicare recipients.
Considerations
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McFadden wrote that Medicare Part D has had some positive economic impacts, such as expanding prescription coverage among seniors, who have the highest medical expenses. However, he cautioned that the program does nothing to contain rising medical costs or improve the efficiency of the nation's healthcare system.
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