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HKS Authors

See citation below for complete author information.

John D. MacArthur Professor of Health Policy and Management, HKS and HSPH; Professor of Health Care Policy, HMS

Abstract

Background: It is not known what effect the increased use of prescription drugs by enrollees in Medicare Part D has had on spending for other medical care. Methods: We compared spending for prescription drugs and other medical care 2 years before the implementation of Part D in January 2006 with such expenditures 2 years after the program's implementation in four groups of elderly beneficiaries: Medicare Advantage enrollees with stable, uncapped, employer-based drug coverage throughout the study period (no-cap group), those who had no previous drug coverage, and those who had previous limited benefits (with either a $150 or a $350 quarterly cap) before they were covered by Part D in 2006. Results: Between December 2005 and December 2007, as compared with the increase in the no-cap group, the increase in total monthly drug spending was $41 higher (95% confidence interval [CI], $33 to $50) (74%) among enrollees with no previous drug coverage, $27 higher (95% CI, $20 to $34) (27%) among those with a previous $150 quarterly cap, and $13 higher (95% CI, $8 to $18) (11%) among those with a previous $350 cap. The use of both lipid-lowering and antidiabetic medications rose in the groups with no or minimal previous drug coverage. As compared with expenditures in the no-cap group, monthly medical expenditures (excluding drugs) were $33 lower (95% CI, $29 to $37) in the group with no previous coverage and $46 lower (95% CI, $29 to $63) in the group with a previous $150 quarterly cap, whereas medical spending was $30 higher (95% CI, $25 to $36) in the group with a previous $350 cap. Conclusions: Enrollment in Medicare Part D was associated with increased spending on prescription drugs. Groups that had no or minimal drug coverage before the implementation of Part D had reductions in other medical spending that approximately offset the increased spending on drugs, but medical spending increased in the group that had more generous previous coverage.

Citation

Zhang, Yuting, Julie M. Donohue, Judith R. Lave, Gerald O'Donnell, and Joseph P. Newhouse. "The Effect of Medicare Part D on Drug and Medical Spending." New England Journal of Medicine 361.1 (July 2, 2009): 52-61.