January 2016 marks the 10th anniversary of the implementation of Medicare Part D. Medicare’s prescription drug benefit was created in 2003 and first implemented 10 years ago so we’re sharing three reasons why Medicare Part D is a success story:
Medicare Part D provides seniors and individuals with disabilities access to affordable prescription drug coverage. Beneficiaries can choose from a range of private plans to best meet their needs. For 2016, there are, on average, 26 Part D plan choices available in every region.
Premiums have been relatively stable, with average monthly premiums remaining around $32.50 in 2016, about half of the Medicare Trustees’ original projection. And multiple studies have found about 90 percent or more of beneficiaries are satisfied with their Part D coverage.
The successful structure of Medicare Part D keeps costs low for beneficiaries and taxpayers. Part D costs are $349 billion (or 45 percent) less than initial 10-year projections and spending on Part D is just 10.9 percent of total Medicare spending in 2014.
This is due in part to the substantial rebates negotiated by private plans with manufacturers, which have increased in each year of the program. Further, more than four in five Part D prescriptions are generic, up from about 50 percent among seniors before Part D was implemented.
Part D is helping patients live longer, healthier lives. Research finds reductions in mortality for Medicare beneficiaries following the implementation of Part D. Since 2006, nearly 200,000 Medicare beneficiaries have lived at least one year longer with an average increase in longevity of 3.3 years.
Implementation was also associated with a $1,200 annual reduction in nondrug medical spending for Medicare beneficiaries with limited prior drug coverage in each of the first two years of the program. And gaining Part D coverage improved adherence among enrollees with congestive heart failure, resulting in $2.3 billion in annual savings to Medicare driven by reductions in Parts A and B expenditures. Finally, Part D coverage was tied to an 8 percent decrease in hospital admissions for seniors.
The first ten years of Medicare Part D have demonstrated how a competitive marketplace works well for beneficiaries and taxpayers. Continue checking in with Medicare Monday for more on Part D and other aspects of Medicare throughout the year.