Impact of Medicare Part D on Seniors' Out-of-Pocket Expenditures on Medications


The Issue

The Medicare Part D prescription drug benefit, implemented in January 2006, sought to reduce out-of-pocket drug costs for seniors and other Medicare beneficiaries. A new study in the Archives of Internal Medicine led by Christopher Millett, a 2008–09 Commonwealth Fund Harkness Fellow, examined whether the program has been successful in achieving this goal.

What the Study Found

Medicare beneficiaries' mean annual out-of-pocket expenditures on medications decreased by 32 percent, from $1,011 to $691, in the year after Part D was implemented. Not surprisingly, there was even a bigger drop in spending for those beneficiaries who did not have pharmacy coverage in 2005 but enrolled in Part D plans in 2006. For this group, mean annual out-of-pocket expenditures decreased by 49 percent, from $1,533 to $784. However, the researchers also noted a 32 percent reduction in spending among Medicare beneficiaries who did not enroll in a Part D plan. This decrease may be attributable to the increased availability and use of generic drugs and the introduction of discount prices by large supermarket chains, among other factors.


The researchers acknowledge that Medicare Part D has been successful in meeting some of its goals. But they question whether the advantage gained by beneficiaries is worth the high public cost of the program—approximately $1,742 per person in 2006.

Publication Details

Publication Date: August 10, 2010
Authors: Christopher Millett, Ph.D., Charles J. Everett, Ph.D., Eric M. Matheson, M.D., Andrew B. Bindman, M.D., Arch G. Mainous III, Ph.D.
Summary Writer: Deborah Lorber
C. Millett, C. J. Everett, E. M. Matheson et al., "Impact of Medicare Part D on Seniors' Out-of-Pocket Expenditures on Medications," Archives of Internal Medicine, Aug. 2010 170(15):1325–30.
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