Will Part D Produce Savings in Part A and Part B? The Impact of Prescription Drug Coverage on Medicare Program Expenditures
Meyers Primary Care Institute; Department of Medicine, Division of Geriatric Medicine
Medical Subject Headings
Medicare; Medicare Part D; Prescription Drugs
Health Services Research | Primary Care
This paper addresses the question of whether prescription drug coverage for Medicare beneficiaries is associated with lower spending for hospital and physician services. We discuss the theoretical rationale for this relationship and the empirical challenges in estimating it. We then test the hypothesis using data from the 1999 and 2000 Medicare Current Beneficiary Surveys. Our results suggest that while drug coverage significantly increases spending on medications, there is no consistent evidence of increases or decreases in Medicare spending for hospital or physician services. We conclude that the cost of the new Medicare Part D drug benefit is unlikely to produce cost offsets elsewhere in the program.
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Citation: Bruce C. Stuart, Becky A. Briesacher, Jalpa A. Doshi, Marian V. Wrobel, and Fatima Baysac (2007) Will Part D Produce Savings in Part A and Part B? The Impact of Prescription Drug Coverage on Medicare Program Expenditures. Inquiry: June 2007, Vol. 44, No. 2, pp. 146-156. doi: http://dx.doi.org/10.5034/inquiryjrnl_44.2.146