Changes in Out-of-Pocket Health Care Spending by Medicare Beneficiaries Following Implementation of the Part D Prescription Drug Program

Findings were presented at a poster session at the annual meeting of AcademyHealth in June 2010 in Boston, Massachusetts. Study findings are summarized below: Abstract Background: The Medicare Part D benefit was designed to reduce out-of-pocket drug costs at a time when out-of-pocket spending on health care had been rising rapidly. Purpose: To compare out-of-pocket costs for prescription drugs and for all health care before and after implementation of Medicare Part D. Data: Medicare Current Beneficiary Survey, 2005 and 2006. Methods: The study sample consisted of community-dwelling individuals who participated in the survey in both 2005 and 2006 (N=6,347). Three cohorts were defined based on their Part D status in 2006: Part D enrollees without a low income subsidy (LIS); Part D enrollees with LIS; and non-Part D enrollees. Primary outcome measures were changes in monthly out-of-pocket costs for prescription drugs and changes in total out-of-pocket costs for health care (including health insurance and Medicare premiums), between 2005 and 2006. Results: Average monthly out-of-pocket drug costs declined by $17 (45 percent) and $12 (15 percent) for Part D enrollees with and without LIS respectively. Non-Part D enrollees experienced no significant change after inflation adjustment. Reductions in out-of-pocket drug costs were greatest among Part D enrollees who lacked drug coverage in 2005. Total out-of-pocket costs for health care increased 7 percent for Part D enrollees without LIS and did not change significantly for Part D enrollees with LIS. Conclusions: Beneficiaries who enrolled in the Part D program in its first year experienced reductions in out-of-pocket drug costs, but not reductions in total out-of-pocket costs.