The New Medicare Part D Prescription Drug Benefit

Abstract

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) enacted a new, voluntary prescription drug program that is now Part D of Medicare. This article summarizes Medicare coverage and discusses the financial condition of Social Security and Medicare and the financial impact of the MMA. The article describes Medicare payment for outpatient drugs before the MMA and the design of the new prescription drug benefit. Finally, the article discusses problems with the Part D drug benefit including the rules for plan formularies, the fact that there are too many choices, for beneficiaries, the unnecessarily high out-of-pocket cost to beneficiaries, difficulties in protecting low income beneficiaries, the lack of cost controls and effective price competition, and the involvement of private insurers in Part D.

Keywords: Prescription Drug Benefit, Medicare Part D, Modernization Act of 2003